Bangkok: Krungsri Research has revised down its forecast for Thailand's GDP to 2.1% growth in 2025 from the previous 2.7%, expecting the MPC to cut interest rates one or two more times this year amid overlapping risks from both US trade policy uncertainty and domestic pressures.
According to Thai News Agency, Dr. Pimnara Hirankasi, Head of Economic Research Team and Head of Research, Bank of Ayudhya Public Company Limited, highlighted that the Thai economy is under pressure from both internal and external factors. The revised forecast reflects concerns over the US import tax increase and domestic issues such as structural problems, economic policy uncertainty, and a delayed recovery in the tourism sector. These factors all contribute to the downside risk to growth and may indicate deeper issues within the Thai economic system.
Krungsri Research identified three main factors for the revised forecast: the impact of an earthquake in late March, weakened momentum in the tourism sector due to safety concerns among Chinese tourists, and increased uncertainty in US trade policy. These factors negatively affect confidence in spending and investment.
Despite these challenges, government spending and economic stimulus measures are expected to be key drivers of the Thai economy. The tourism sector, although recovering slowly, is anticipated to increase foreign tourist numbers from 35.5 million last year to 36.5 million. However, international trade faces risks due to US trade policy uncertainty. Although the US Trade Court suspended reciprocal tariffs on May 28, 2025, there remains a risk of additional import taxes under other US laws.
Thai exports in the second half of the year are at risk of negative impacts, with forecasts assuming a 10% US import tax on most trading partners, including Thailand. Consequently, exports are expected to grow by only 2.0% for the year. Private consumption is projected to grow at a slower pace of 2.6% due to weakening consumer confidence, slowing agricultural income, high household debt, and the slow recovery of the tourism sector affecting employment and income. Government investment is expected to grow by 5.8% but may not be enough to stimulate private investment growth. The slow recovery of the tourism sector and uncertainty over US tariffs further exacerbate risks to private investment.
The policy interest rate may see additional cuts under the current economic conditions. The Bank of Thailand (BOT) might implement further accommodative monetary policies to support recovery, given the potential for economic slowdown and low inflationary pressures.
The Thai economy is expected to face ongoing challenges, including US import tariff policies, international political tensions, domestic economic policy uncertainty, and structural issues such as declining manufacturing competitiveness, high household debt, and a rapidly aging society.
Dr. Pimnara emphasized that despite similar external risks globally, Thailand's internal pressures could lead to more severe impacts, necessitating policy caution and timely responses.