Thailand’s 2025 growth forecast slashed to 1.5% amid global and structural headwinds

In its Q2 2025 outlook, the centre also revised its 2026 forecast down to 1.4%, attributing the decline to trade tensions, shifts in US policy, domestic economic fragility, and constrained fiscal space.

The centre warned of broad-based risks that could drag Thailand’s economy into a technical recession in the second half of the year. The tourism sector, once a key growth driver, is losing momentum, while exports and private investment remain sluggish due to continued uncertainty in global trade policy.

Private consumption has also slowed sharply, reflecting fragility in employment and income under tight financial conditions. Household credit growth remains weak, and debt quality remains a concern, denting both consumer and business confidence.

On monetary policy, the centre predicts the Bank of Thailand’s Monetary Policy Committee (MPC) will cut the policy interest rate twice more this year, bringing it down to 1.25%, in an effort to support the economy and aid the deleveraging process among households and businesses. 

However, SCB EIC cautions that even with lower rates, the ability to stimulate spending may remain constrained due to the fragile economic climate.

The report also flags growing pressure on Thai businesses, particularly exporters to the US and China, those facing competition from low-cost Chinese products, and domestic demand-dependent sectors like real estate and automobiles, which are grappling with high financial costs and policy uncertainty.

Despite the challenging landscape, SCB EIC identifies opportunities in sectors with greater adaptability. These include businesses targeting high-income consumers, those aligned with megatrends such as health and wellness, and firms with strong product and service differentiation.

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.

Globally, economic growth is expected to slow to 2.3% in 2025 from 2.8% last year. Key drag factors include escalating trade conflicts, geopolitical tensions, and waning confidence in the US economy. Central banks worldwide are expected to lower interest rates to support growth.

Thailand’s economic recovery in the latter half of 2025 will hinge on several variables, including US Federal Reserve monetary policy, the rebound of the tourism sector, and the pace of domestic budget disbursement, which will be crucial to driving growth.

In conclusion, SCB EIC underscores the need for proactive monitoring and flexible adaptation by both the public and private sectors during this period of economic vulnerability. Restoring confidence and enhancing long-term competitiveness will be critical for Thailand’s future resilience.