Skip to content
All about business. — All about finance. — All about investing.

Economic vulnerability in Thailand highlighted, critical negotiations with the U.S. regarding tax matters emphasized

Economic forecast for the second half of the year anticipates a weakening, with apprehension surrounding US tax negotiations and political turbulence. Discussions scheduled with critical agencies to coordinate economic policies.

,   and  Administrator
3 min read
Economy of Thailand viewed as weak, critical tax discussions with the U.S. are emphasized as...
Economy of Thailand viewed as weak, critical tax discussions with the U.S. are emphasized as important

Economic vulnerability in Thailand highlighted, critical negotiations with the U.S. regarding tax matters emphasized

In response to the forecasted slow growth of Thailand's economy for the second half of 2025, the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) has proposed a series of potential economic strategies to address the expected weak economy. The JSCCIB has revised Thailand's GDP growth forecast for 2025 down to a range of 1.5-2.0%, marking a significant weakening compared to the Bank of Thailand's forecast of 2.3% growth [1].

Key economic strategies and considerations include:

1. **Targeted Sector Support:** The JSCCIB is preparing a plan to propose to government agencies that prioritizes support for sectors most affected by the slowdown, particularly manufacturing and exports, which are forecasted to shrink by over 10% in H2 2025. This focus aims to understand the challenges in these sectors and drive coordinated efforts to foster growth and employment [1].

2. **Resolving External Trade Tensions:** The talks with the United States regarding tariffs are crucial. JSCCIB warns that if the current 10% US tariff on Thai exports persists or increases (potentially to 18%), it will have a significant adverse effect on GDP growth, possibly pushing it down to 1.5%. Hence, continued negotiations to reduce or extend tariff relief are seen as vital to economic stability and export growth [1][3].

3. **Enhancing Political Stability:** Political uncertainty is cited as a critical factor undermining domestic demand, disrupting government budget disbursements, and reducing confidence in economic activities. Strengthening political stability is emphasized to ensure smooth implementation of budget spending and support for domestic economic drivers [1].

4. **Coordination for Confidence Restoration:** The JSCCIB is looking to align with key agencies to unify economic strategies over the next 6 to 12 months to restore business and consumer confidence, which is essential to counter sluggish domestic demand and weak tourism inflows, particularly from China [1].

The JSCCIB plans to meet with key agencies to align economic strategies, including the Bank of Thailand, the National Economic and Social Development Council (NESDC), the Ministry of Finance, and the Ministry of Commerce [4]. The situation is further aggravated by the rapid appreciation of the baht, which has strengthened to 32.5 baht per US dollar [5]. This strong baht puts pressure on exports, as it makes Thai products more expensive for foreign buyers.

Moreover, the JSCCIB points out structural issues undermining the country's competitiveness, such as transhipment export issues, the import of low-quality goods, and investment policies that don't focus on adding value domestically, such as domestic employment creation [6]. The JSCCIB aims to understand the challenges and drive the country in the same direction to restore confidence.

In addition, the JSCCIB urges the Bank of Thailand to reduce interest rates to ease pressure on the baht and stimulate the economy [2]. The key negative factors include sluggish domestic demand, fewer Chinese tourists than expected, and political uncertainty that may affect budget disbursements [1]. Exports in the second half of the year are likely to shrink by over 10%, meaning that full-year 2025 export growth may be close to 0% [7].

These measures are aimed at preventing further contraction and stimulating more resilient growth despite external and internal challenges [1][2][3]. The JSCCIB's strategies focus on targeted sector support, resolving external trade tensions (notably with the US), stabilizing the political environment, and fostering public-private collaboration to mitigate the weak economic outlook in H2 2025 for Thailand.

  1. In light of the projected slowdown in Thailand's economy, investments in personal-finance and general-news sources suggest that the JSCCIB is considering focusing support on sectors like manufacturing and exports, which are predicted to decrease by over 10% in the second half of 2025.
  2. The JSCCIB's economic strategies also involve negotiations with the United States to potentially reduce or extend tariff relief, as rising tariffs could have a significant negative impact on Thailand's economy.
  3. Beyond economic strategies, the JSCCIB recognizes political stability as crucial for countering sluggish domestic demand and addressing the weak economy, stressing its importance for budget spending and economic activities.
  4. The JSCCIB plans to work with key agencies, such as the Bank of Thailand, the National Economic and Social Development Council (NESDC), the Ministry of Finance, and the Ministry of Commerce, to coordinate efforts in restoring business and consumer confidence over the next six to twelve months.
  5. In line with these strategies, the JSCCIB calls for the Bank of Thailand to consider lowering interest rates to alleviate pressure on the baht and stimulate economic growth, addressing issues like sluggish domestic demand, fewer Chinese tourists, and political uncertainty.

Read also:

    Related

    Latest