Thailand Economic Monitor, July 2024: Unlocking the Growth Potential of Secondary Cities

The economic recovery faltered due to global and domestic headwinds as growth fell to 1.5 percent year-on-year in 2024 Q1. The current account remained positive at 2.2 percent of gross domestic product (GDP) in Q1 2024 but underlying weaknesses persist. Inflation has turned positive but remained the lowest among emerging markets due to energy subsidies and a weak recovery. The financial system remained stable amid improving but weak profitability, although risks associated with high levels of household debt persist. The fiscal stance has become less expansionary as capital spending lapsed due to the delayed budget. The economy is projected to recover in 2024 supported by sustained private consumption as well as tourism and goods exports recovery. Thailand faces the mounting challenge of reconciling fiscal sustainability and short-term stimulus. Empowering Thailand’s secondary cities would be a significant paradigm shift. The possibilities suggested in this chapter cannot be realized through marginal adjustments to existing policies. An intergovernmental fiscal policy that puts more responsibility and accountability on local government, and frees communities to plan the futures, will require systemic change. The transition will require legislative and institutional reforms to grant LAOs increased authority while ensuring greater accountability. It will require local planning processes that are responsive and adaptable to market demands for land, housing, labor, and transportation.