Second-quarter resilience
Thailand’s economy showed more strength than expected in the second quarter, expanding 2.8% from a year earlier. The rise slightly beat forecasts, with exports providing a cushion against weak domestic demand. Businesses rushed to ship goods before US tariffs took effect, boosting short-term performance.
Tariff challenge looms
The newly imposed 19% levy on shipments to the United States threatens to erode this momentum. The National Economic and Social Development Council (NESDC) warned that Thailand risks losing market share to regional competitors in electronics, machinery and auto parts, even if staples like rice and rubber remain secure. NESDC chief Danucha Pichayanan stressed the need for urgent reforms to improve competitiveness.
Structural reforms and warnings
Moody’s Ratings cautioned that Thailand’s growth potential could weaken further without progress on reforms. Political uncertainty, limited fiscal space and global trade instability are compounding challenges. Analysts say that deep-rooted structural issues make it difficult for the country to grow at its potential pace of 3%.
Tourism and politics weigh
Tourism, once a key growth engine, continues to lag. Forecasts for Chinese arrivals were cut from 6 million to 4 million this year, while political instability has dampened confidence. The recent suspension of the prime minister and border clashes with Cambodia have further complicated the outlook, though officials said the clashes should not significantly affect industry.
Policy outlook
The Bank of Thailand has lowered its benchmark rate four times since October to shore up growth, and economists expect another cut later this year. While the government lifted its 2025 growth outlook midpoint to 2%, analysts remain cautious. The temporary boost from frontloaded exports is fading, and households and businesses may soon feel the full weight of tariffs.
