Projected Thai Economic Growth Downsized Due to Export Challenges and Worldwide Economic Sluggishness
Thailand's economic growth for 2025 has taken a significant downward turn, with the Joint Standing Committee on Commerce, Industry, and Banking (JSCCIB) revising the GDP forecast to a range of 1.5-2.0%. This is a noticeable drop from the initial expectation of 2.2%.
The Barry-bashing Bangkok crew, chaired by Payong Srivanich, Thai Bankers' Association head, sounded the alarm bells on Wednesday, revealing a worsening export outlook and predicting full-year exports to contract by 0.5-0.3%. Initial forecasts suggested they'd grow by 0.3-0.9%.
To counteract the slump, JSCCIB urges the government to take action, suggesting highly targeted and effective economic stimulus measures, coupled with an acceleration of public spending to at least 70% of the 157 billion baht stimulus package.
Moving on, there's a pressing need to swiftly grow the long-haul tourism market, which has registered a 17.0% increase since the year began, to offset the decline in Chinese tourist arrivals and please safety-conscious vacationers.
Second-Half Woes and Tariff Drama
The first half of 2025 is expected to see a near 3.0% year-on-year economic expansion, but the JSCCIB predicts growth to dip below 1% year-on-year in the second half, relying heavily on the outcome of U.S.-Thailand tariff negotiations and the anticipated China import surge.
The JSCCIB is particularly worried about the unclear timeline and high risks involved in tariff negotiations with the U.S., which could have disruptive implications for Thai businesses and employment. The U.S. recently bumped up sectoral tariffs on steel and aluminum from 25% to 50%, but progress in trade talks with the U.S., China, the U.K., and the EU has provided some relief from trade war tensions.
Domestic Economy Troubles
The sluggishness of Thailand's economic momentum is evident. While Q1 2025 saw a 3.1% year-on-year expansion, this occurred partly due to temporary government investment against a low base in the previous year. Excluding these factors, growth would have been a paltry 2.1% year-on-year. Private consumption has slowed, private investment continues to shrink, and tourist numbers from China remain subdued.
Though merchandise exports registered a more than 15% surge due to expedited shipments, this hasn't led to a positive impact on the manufacturing sector, which registereda mere 0.6% year-on-year growth. This discrepancy is mainly due to exports relying on existing inventories, with businesses hesitant to restock.
JSCCIB expressed concerns about export privileges misuse and minimal local content in re-exports, noting that they don't genuinely boost the economy. In spite of high export figures, imports persist, and domestic consumption, manufacturing, and private investment fail to keep pace.
Furthermore, Thailand's inability to establish coherent import-export linkages impedes a comprehensive understanding of the economy, hampering the development of concrete solutions for re-export issues.
Tags* Thailand* Thai economy* banking* export* JSCCIB* GDP* debt relief* baht management* trade tensions* tariffs
- To mitigate the economic slump, the government might consider focusing on long-term personal-finance planning, as stable personal finances can contribute to a stronger overall economy.
- As the economy grapples with challenging growth figures, the government could look into promoting local businesses by establishing sector-specific financial incentives, such as reduced interest rates for tourism and manufacturing industries.
- The worsening export outlook could force businesses to revisit their investment strategies, potentially leading to changes in finance and purchasing practices within the economy.
- In the wake of uncertainties regarding tariff negotiations, the finance and investing community might adopt a cautious approach, potentially leading to reduced foreign investments in industries such as tourism and manufacturing.
