Reduced anticipated expansion of Thailand's economy for 2025 to 1.5% due to global and domestic obstacles
The Siam Commercial Bank's Economic Intelligence Centre (SCB EIC) has downgraded Thailand's economic growth forecast for 2025 to 1.5%, citing a combination of external trade pressures, vulnerable agricultural sectors, weakening domestic demand, and global economic headwinds as the core challenges for Thailand's economy.
Trade tensions and US tariffs pose a significant threat to Thailand's economy. The failure to secure reduced US tariffs on Thai exports, particularly a 36% retaliatory tariff imposed from August 2025, could lead to a sharp export contraction, slowing Thai GDP growth to as low as 1.1% in 2025 and 0.4% in 2026 under a worst-case scenario. Key sectors like pork, poultry, and maize are highly vulnerable to competition if Thailand has to open its market to US agricultural products in trade negotiations.
Private investment and consumer spending are expected to decline, especially in the second half of 2025, driven by uncertainty over tariffs, worsening employment, and low consumer confidence. The Monetary Policy Committee may reduce policy interest rates two or more times in 2025 to stimulate the slowing economy.
Political instability and investment delay are also hurting investor confidence and delaying economic policies, further worsening economic conditions. Thailand's trade deficit with China is rising sharply, and slower growth in global economies is impacting trade-dependent sectors.
Exports and private investment in Thailand remain sluggish due to continued uncertainty in global trade policy. Global economic growth is expected to slow to 2.3% in 2025 from 2.8% last year, with escalating trade conflicts, geopolitical tensions, and waning confidence in the US economy being key drag factors. Central banks worldwide are expected to lower interest rates to support growth.
The SCB EIC has also revised the 2026 economic growth forecast down to 1.4%. In currency markets, the centre expects the baht to strengthen slightly in the short term, driven by capital inflows and a weakening US dollar. By the end of 2025, the baht is projected to settle within the 31.5-32.5 range to the dollar.
Domestic demand-dependent sectors like real estate and automobiles are grappling with high financial costs and policy uncertainty. The tourism sector in Thailand is losing momentum. The SCB EIC warns of broad-based risks that could drag Thailand's economy into a technical recession in the second half of 2025.
However, the SCB EIC also identifies opportunities in sectors with greater adaptability, such as businesses targeting high-income consumers, those aligned with megatrends like health and wellness, and firms with strong product and service differentiation. The centre underscores the need for proactive monitoring and flexible adaptation by both the public and private sectors during this period of economic vulnerability.
- The Siam Commercial Bank's Economic Intelligence Centre (SCB EIC) has revised the 2026 economic growth forecast for Thailand down to 1.4%, citing broader challenges for the economy.
- Despite the challenges, opportunities exist in sectors with greater adaptability, such as businesses targeting high-income consumers and those aligned with megatrends like health and wellness.
- Political instability and investment delay have been hurting investor confidence, further worsening economic conditions and leading to slower growth in sectors like real estate and automobiles due to high financial costs and policy uncertainty.
- The tourism sector in Thailand, which relies heavily on foreign tourists, is losing momentum, contributing to the broader economic risks that could lead to a technical recession in the second half of 2025.
