Bangkok: Kasikorn Research Center has maintained its forecast for Thailand’s GDP growth at 1.4% for 2025, highlighting the imminent conclusion of a 90-day import tariff deferral period and indicating a lack of progress in negotiations with the United States.
According to Thai News Agency, the Thai economy faces potential risks of a technical recession due to reduced exports and foreign tourist arrivals, exacerbated by US import tariffs. The inflation forecast has been adjusted down to 0.3%, and if the US sustains a 10% tariff throughout the year, Thai exports are projected to grow by 0.5%, and the economy by 1.8%. The Thai baht continues to show volatility, with projections suggesting it could reach 32 baht per US dollar. The Monetary Policy Committee (MPC) is anticipated to cut interest rates once more this year.
Mr. Burin Adulwattana, Managing Director and Chief Economist of Kasikorn Research Center Co., Ltd., commented on the uncertainty surrounding US President Trump’s import tariff policies, which have impacted global trade and investment. The OECD recently lowered its forecast for global economic growth in 2025 by 0.2% to 2.9%, and for the US economy by 0.6% to 1.6%. The unpredictability of US trade and economic policies has diminished investor confidence, resulting in an 8% depreciation of the US dollar since Trump’s presidency began, accompanied by rising US government bond yields.
The US Federal Reserve is navigating its policy cautiously amidst potential inflation risks stemming from customs tariff adjustments, despite pressures to reduce interest rates. The Fed has cut the headline inflation forecast for 2025 to 0.3%, and the MPC may reduce the policy interest rate once more this year. The baht is expected to strengthen to 32 baht per US dollar within the next 3-6 months and potentially continue this trend until year-end.
As the July 9, 2025 deadline for US import tariffs approaches, Thailand’s negotiation progress remains stagnant compared to other countries, with the economy still predicted to grow at 1.4%. If the US maintains a 10% tariff, Thai exports could expand by 0.5%, pushing economic growth to 1.8%. However, a 36% tariff could severely impact exports and GDP in the latter half of the year.
Unclear US tariff policies threaten Thai industrial production, particularly for exports to the US and China in sectors such as electronics, auto parts, and chemicals. Consumer goods imports are expected to exceed 30% of retail sales in 2025, and foreign tourist numbers are predicted to decline for the first time in three years.
Domestic car sales are projected to decline further in the year’s second half, impacted by a weak economy and stringent lending conditions. Agricultural income is also expected to contract due to pricing pressures and reduced demand, amid heightened global competition.
The private sector faces a challenging fundraising environment, with decreased loan demand and rising bad debts prompting a revision of loan estimates for Thai commercial banks to -0.6%. Non-performing loans (NPLs) are expected to rise, albeit remaining below 3% of total loans. Financial institutions are focusing on managing and restructuring debts.
ESG activities within Thailand’s private sector have slowed, with a decline in Sustainable Finance bond issuance and a shift towards green loans. Large businesses continue to raise funds through Project Finance initiatives, while SMEs may delay their plans or invest in energy-saving activities.
Mr. Burin emphasized the need for effective budget utilization by the government, balancing short-term relief measures with long-term economic restructuring. Immediate measures should support domestic production and restore tourist confidence, while businesses are advised to maintain cash flow amidst ongoing uncertainties.