What To Know
- Thailand’s economic outlook has taken a sharp downward turn as the Bank of Thailand (BOT) slashed its growth forecasts for the remainder of 2025 and beyond.
- The revision follows escalating trade tensions with the United States, which plans to impose sweeping retaliatory tariffs on a range of Thai exports starting August 1.
Bangkok Business News: Thailand’s economic outlook has taken a sharp downward turn as the Bank of Thailand (BOT) slashed its growth forecasts for the remainder of 2025 and beyond. The revision follows escalating trade tensions with the United States, which plans to impose sweeping retaliatory tariffs on a range of Thai exports starting August 1. BOT now expects economic growth to slow to just 1.6% in the second half of 2025 and a meager 1.7% for 2026—figures that fall well below earlier projections. This Bangkok Business News report highlights growing concerns among Thai policymakers as the global economic landscape turns more volatile.
The Bank of Thailand has slashed its growth forecasts for the remainder of 2025 and beyond
Image Credit: StockShots
The central bank had previously projected a more robust 2025 GDP growth of 2.8%, but that number has now been cut to 2.3% due to the anticipated impact of the new 36% US tariffs. These penalties are likely to hit Thailand’s export-reliant economy particularly hard, undermining a fragile post-pandemic recovery. The blow comes just as the country was beginning to show signs of industrial and trade-driven momentum in early 2025.
Exports and Private Sector to Bear the Brunt
Thai exports are now expected to drop by 4% in the second half of 2025 alone. This downturn is anticipated to drag down both manufacturing output and private sector investment. BOT also warns that the impact will not be a short-term blip; exports could shrink another 2% in 2026, prolonging the economic drag.
In response to the deteriorating trade outlook, businesses are showing signs of caution, with many holding off on expansion or new investment. This conservative approach could stall job creation and domestic demand through 2026.
Stability Risks and Inflation Outlook
While the BOT maintains that macroeconomic risks remain relatively contained, it continues to monitor a trio of looming threats: the intensifying US-China trade war, persistent political instability within Thailand, and ongoing financial constraints affecting small and medium enterprises.
Officials at the Bank of Thailand acknowledged that the broader economic cooling was inevitable, with or without the tariffs. He noted that although easing interest rates might provide some debt relief to households and businesses, reduced loan activity and weakened credit demand would still constrain economic activity.
BOT officials added that inflation would remain low, estimating headline inflation at just 0.5% for 2025 and 0.8% for 2026. This indicates limited upward pressure on prices, but also underscores weak domestic consumption.
The recent forecast paints a sobering picture of Thailand’s near-term economic prospects. While financial markets remain stable and inflation appears contained, the real economy is now bracing for turbulence driven by external trade shocks and internal uncertainties. Policymakers will likely need to coordinate fiscal and monetary measures more closely in the coming months to cushion the fallout and restore investor confidence.
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