Consumer spending in Thailand is expected to be positive in 2024, driven by economic recovery and high consumer confidence. However, high household debt and interest rates are potential risks to this outlook.
Key View: We hold a positive outlook for consumer spending in Thailand over 2024, as the wider Thai economy recovers and growth figures return to a more stable medium-term trajectory. High-frequency data indicate that consumer confidence has reached a 45-month high, suggesting that consumer spending on big-ticket items will be more likely, as the economic and health situation in the market continue to stabilise. While headlines economic momentum will support household spending over the coming quarters, the key risk to the outlook over 2024 remains high debt levels of households amidst elevated interest rate environment. This will require consumers to allocate more of their budgets to debt repayments, constraining their ability to spend on other goods and services.
Consumer Spending Outlook For 2024
We maintain a positive outlook for consumer spending in Thailand throughout 2024, as growth continues in sectors such as retail, hospitality, tourism, and gastronomy. Real household spending (calculated at 2010 prices) is projected to grow by 4.8%, decelerating from the 6.1% estimated for 2023 as consumer spending stabilise with the volatility witnessed from 2020 to 2023, induced by Covid-19 lockdowns and a subsequent remarkable recovery, subsiding. In total, we anticipate spending to exceed THB8.9trn (in 2010 terms), supported by a favourable macroeconomic environment.
Given the Bank of Thailand’s prospective policy to ease rate hikes in H124, in response to controlled inflationary pressures and a robust Thai baht outlook, we expect spending levels to remain supported over the year. Total spending in 2024 will also exceed the 2019 pre-pandemic levels for the first time, suggesting that 2024 will remain crucial for the market’s medium-term recovery outlook.