Thai Economic Outlook for Q1 2025

President Trump’s potential second term increases global uncertainty, reshaping trade policies and impacting the economy. Thailand faces challenges from U.S. tariffs, sluggish recovery, and the need for strategic adaptation among businesses.

Global Uncertainty and Economic Forecast
The potential return of President Trump raises global uncertainties in trade and investment policies, as SCB EIC anticipates significant changes that could reshape international relations. Trump’s second term may lead to reciprocal tariffs instead of broader tariffs. The implementation of these tariffs, especially on key imports like automobiles and steel, is expected to elevate the U.S. effective tariff rate by around 11%. If retaliatory measures emerge from trading partners, global GDP might decline by 1.3% and inflation could increase by 0.5% in the medium term.

Thailand’s Economic Outlook
For Thailand, SCB EIC maintains a 2.4% growth forecast for this year, bolstered by tourism recovery and stimulus measures. However, external pressures, particularly from U.S. trade policies, could hinder Thai exports and private investments. The slowdown in the country’s manufacturing sector is anticipated, primarily due to increased imports from China focused on domestic market competition. Additionally, the Thai economy remains fragile, grappling with high household debt and subdued consumer spending.

Strategies for Business Adaptation
To cope with these challenges, Thai businesses are encouraged to adopt the 4P strategy: Product innovation to meet market demands, diversifying markets to reduce dependency, comprehensive risk management, and enhancing productivity for sustainable growth. Despite significant structural weaknesses, opportunities may arise for Thailand to capture market share in the U.S. previously dominated by competitors like China, underscoring the importance of a resilient approach to future economic uncertainties.

Thai Economic Outlook for Q1 2025
SCB EIC’s latest projections indicate that the Thai economy is expected to grow by 2.4% to 2.6% for the full year of 2025, following a 2.7% expansion in 2024. For Q1 2025 specifically, growth is likely to remain modest, driven by a combination of ongoing recovery in tourism and government spending, though tempered by external pressures and structural challenges.

Source: Thailand Business News