BOT expects lower than 2% growth for Thailand due to US tariffs
BOT lowers Thailand's growth forecast to 1.6% in H2 2025, citing US tariffs' impact on exports and economy.
Bank of Thailand (BOT) has revised its economic growth forecast, predicting a slowdown in Thailand’s growth to just 1.6% for the second half of 2025, due to the impact of US retaliatory tariffs on Thai exports.
Economic Growth Predictions Lowered
On Thursday, BOT revealed that the US import tariffs would negatively affect Thailand's economy, reducing growth to 1.6% in the second half of 2025 and 1.7% throughout 2026. The 36% punitive tariffs, set to take effect from August 1, have prompted the BOT to lower its forecast for Thailand’s 2025 GDP growth to 2.3%, down from previous estimates.
Bunnaree Punnarach, Director of BOT's Macroeconomics Division, stated that exports are expected to fall by 4% in the second half of the year, significantly impacting the country’s growth. Although the manufacturing sector and exports initially boosted growth in the first half of 2025, this growth will be tempered by the new tariffs.
US Tariffs and Export Impact
The US trade tariffs are expected to shrink Thailand’s exports by 2% in 2026, contributing to a severe slowdown in the economy. The private sector is also expected to reduce investments due to the weakened trade environment, which will result in slower growth in 2026.
Despite these challenges, Bunnaree emphasized that economic risks for 2025 and 2026 remain low. However, BOT will continue to monitor key risks, including:
- US-China trade war and geopolitical tensions
- Political uncertainties within Thailand
- Credit constraints impacting SMEs and vulnerable groups
Economic Outlook and Inflation Predictions
BOT's Deputy Governor, Piti Disyatat, noted that Thailand's economy would inevitably slow in the second half, regardless of the tariff's intensity. While the potential for lower interest rates could help ease the debt burden on debtors, financial demand is expected to decrease due to reduced loan activity.
Surach Tanboon, Senior Director of BOT's Monetary Policy Department, also predicted a low inflation rate, forecasting headline inflation to be just 0.5% in 2025 and 0.8% in 2026.
