Bangkok: The Federation of Thai Industries (FTI) has revised its 2025 economic growth forecast upwards to 1.8-2.2%, due to concerns regarding a slowdown in the latter half of the year and a decline in exports following the absence of enhancing factors in overseas trade. The FTI perceives US trade policy as a significant indicator, urging Thailand to adapt for long-term competitiveness, especially for SMEs, by restructuring its industry, upgrading production processes throughout the supply chain, and increasing local content in upstream industries.
According to Thai News Agency, Mr. Payon Srivanich, Chairman of the Thai Bankers' Association and chair of the Joint Standing Committee on Commerce, Industry, and Banking (JSCCIB), stated that the global economy is demonstrating signs of improvement following the US's tariff agreement announcements with several countries. The revised IMF global economic growth forecast for 2025 is now 3%, up from 2.8%, yet still below the historical average of approximately 3.5%. This adjustment reflects the slowdown caused by high tariffs and uncertainties in implementation, particularly concerning transshipment goods and local content determinations for each country.
Thailand's economy is projected to grow by 1.8-2.2% in 2025, an increase from the earlier estimate of 1.5-2.0%. Exports are also expected to grow by 2-3%, surpassing previous estimates. Successful trade negotiations have resulted in Thailand facing tariffs of 19% instead of 36%. Despite this progress, further negotiations are needed to prevent Thailand from being disadvantaged relative to neighboring countries. The economy is anticipated to slow in the second half, with exports weakening due to factors such as accelerated exports, increased price competition, a stronger baht, issues in the informal economy, and declining US consumer purchasing power due to inflation. Additionally, tourism revenue is expected to decrease owing to fewer foreign tourists, particularly short-haul flights, and the influence of the Thai-Cambodian conflict. Significant volatility is expected in the final quarter and early next year, especially in the export sector, which will be heavily impacted by US tariffs and increased competiti on from other countries.
Thailand must swiftly adapt to manage both short-term and future transitions. In the short term, increased price competition will affect both Thai exports and domestically-sold products, which will compete against imports. This will particularly impact low-margin groups. It is vital to explore local content usage to mitigate transshipment tax risks and ensure effective law enforcement, including customs procedures and product standard inspections for domestic sales. The US trade policy serves as a wake-up call for Thailand to capitalize on this opportunity to enhance the long-term competitiveness of the private sector, particularly SMEs. This involves restructuring the industry, prioritizing sectors aligned with national strategy, upgrading production processes to increase local content, boost productivity, reduce costs, utilize technology and innovation, and enhance labor skills. Employing Thai workers both domestically and abroad will create genuine economic value for the country, requiring close cooperatio n between the public and private sectors.
However, the FTI notes that Thailand lacks crucial data on the industrial production structure, such as domestic use of primary and intermediate raw materials and regional value content. The private sector has initiated basic data collection to comply with US export conditions, but comprehensive and reliable data gathering requires cooperation from the government and relevant agencies. This will aid decision-making and negotiations under the new trade paradigm. Thailand's role in ASEAN offers opportunities for Thai entrepreneurs in the global trade arena.