US tariffs force Thailand to cut growth forecast to 2.1%
Rising trade tensions and weaker exports drag down hopes for stronger economic recovery
The Ministry of Finance has revised its forecast for Thailand’s economic growth this year to 2.1%, down from the previous 3%, citing the impact of US tariffs and a global economic slowdown on Southeast Asia’s second-largest economy.
Pornchai Thiraveja, director-general of the Fiscal Policy Office, indicated that if the US imposes a 10% tariff on Thai imports instead of the proposed 36%, the GDP growth could potentially increase to 2.5%. Exports, a significant growth driver for Thailand, are now expected to rise by 2.3% this year, a decrease from an earlier prediction of 4.4%, he stated during a press conference.
These predictions followed the Bank of Thailand’s decision to cut interest rates for the second consecutive meeting and lower its economic forecasts for the year. The central bank projects the economy to grow by 2% in the best-case scenario, with a possibility of 1.3% growth if the US tariffs have a substantial impact.
The ministry has also reduced its forecast for foreign tourist arrivals, another vital growth factor, to 36.5 million this year from an earlier estimate of 38.5 million. Nevertheless, this figure would still represent a modest 2.7% growth from last year.
Recognising the precarious nature of Thailand’s economic outlook, the government must accelerate the disbursement of the 2025 fiscal budget to support economic activity, Pornchai mentioned. For this year, the government aims for a disbursement rate of 94.4%, with current expenditure targeted at 101% and capital investment at 74.8%.
Despite the forecasted US dollar-based export growth of 2.3%, taking into account the direct pressure from US tariffs, the postponement of US reciprocal tariffs until early July, along with exemptions for specific items such as electronics and computers, has offered slight relief.
Amidst uncertainty regarding US trade policy, domestic consumption in Thailand remains robust, with private consumption expected to grow by 3.2% due to increasing purchasing power and a rebound in tourism. Private investment is anticipated to grow by 0.4%, while government consumption is projected to increase by 1.2% and public investment by 2.8%, driven by ongoing infrastructure spending in the third and fourth quarters of fiscal 2025 and into the first quarter of fiscal 2026, reported Bangkok Post.
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