Thailand needs structural reforms to boost GDP: economist

KKP warns of potential risks from Trump’s policies, struggling manufacturing and agricultural sectors, tighter lending and rising public debt

Thailand needs to initiate structural reform across its economy to accelerate the expansion of its gross domestic product (GDP) to over 3% per annum, Kiatnakin Phatra Financial Group (KKP) said on Thursday.

KKP predicted a 2.6% GDP growth this year, roughly the same as last year, versus over 3% per annum before the Covid-19 pandemic.

This trend will continue for a few years under the current situation, Pipat Luengnaruemitchai, KKP’s chief economist warned.

He said the Thai economy has only been growing marginally due to three factors, namely struggling manufacturing and agricultural sectors, tightening of loan criteria, which has resulted in fewer loans being granted, and a surge in public debts, which may hit the ceiling of 70% of GDP in the next few years. 

"The service and tourism sectors have been carrying the economy for the past two years, while the manufacturing industries have only just started recovering in the last couple of quarters,” he said. “What is concerning is that automated manufacturing that was once a source of hope has started losing momentum.”Pipat urged Thai authorities to watch out for the potential impact US President Donald Trump’s policies will have on the Thai economy, particularly those related to taxes and tariffs. Thailand currently has a trade surplus with the US of more than US$40 billion, which may draw scrutiny from the US, he said. 

In the worst-case scenario, Trump’s policies could push Thailand’s GDP growth down to as low as 2%, Pipat said, adding that sectors with the highest risks include electronics, rubber, solar cells, machinery and auto parts, which are the biggest exporters to the US. 

“Stimulating the economy with short-term measures will not help boost the GDP,” Pipat said. “We need a comprehensive structural reform of the overall economic system, which will serve as a long-term solution against any future uncertainties.”

(2025/02/07-00:00)