Thai GDP Growth Forecast Slashed Amid Export Woes and Global Slowdown

JSCCIB warns of economic headwinds, urging targeted stimulus and currency management as export outlook darkens for 2025.

 

Thailand's economic growth prospects for 2025 have been significantly downgraded, with the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) revising its GDP forecast downwards to a range of 1.5-2.0%.

 

This marks a considerable drop from the previous estimate of 2.2%, primarily driven by a projected slowdown in merchandise exports and private investment in the latter half of the year.

 

The JSCCIB, chaired by Payong Srivanich, also the Chairman of the Thai Bankers' Association, revealed on Wednesday that the export outlook has worsened, with full-year exports now anticipated to contract by 0.5-0.3%, a stark reversal from the earlier forecast of 0.3-0.9% growth.

 



 

To counteract the sluggish growth, the JSCCIB is urging the government to implement highly targeted and effective economic stimulus measures, alongside accelerating public spending to at least 70% of the 157 billion baht stimulus package.

 

Furthermore, there's a pressing need to rapidly expand the long-haul tourism market, which has seen a 17.0% increase since the year began, to offset the decline in Chinese tourist arrivals and bolster safety confidence among visitors.
  



 

Second Half Concerns and Trade Tensions

While the first half of 2025 is expected to see a near 3.0% year-on-year economic expansion, the JSCCIB forecasts growth to dip below 1% year-on-year in the second half.

 

This hinges critically on the outcome of ongoing tariff negotiations between the United States and Thailand, in comparison to rival nations, as well as the anticipated surge in imports from China, which could have widespread implications for Thai businesses and employment.

 

The JSCCIB stressed that current short-term government interventions should evolve into sustained medium and long-term strategies to address deep-seated structural issues.

 

These measures must be adaptable and responsive to the highly uncertain global landscape, particularly in offering support to export-affected businesses.

 



 

Preventing the unchecked influx of imported goods through stringent quality controls and border inspections, alongside curbing the misuse of export privileges, is also paramount.

 

Payong highlighted the increasing global economic uncertainty and slowdown, exacerbated by the ongoing review of US government tariff measures.

 

Notably, the US recently increased sectoral tariffs on steel and aluminium from 25% to 50%.

 

However, progress in trade talks between the US, China, the UK, and the EU has provided some relief from trade war tensions.
  

Domestic Economic Headwinds

The Thai economy's momentum is visibly weakening. While Q1 2025 saw a 3.1% year-on-year expansion, this was partly attributed to temporary factors such as government investment against a low base in the previous year.

 

Excluding these, growth would have been merely 2.1% year-on-year. Private consumption has slowed, private investment continues to shrink, and Chinese tourist numbers remain subdued.

 

Despite a more than 15% year-on-year increase in merchandise exports due to accelerated shipments, this hasn't translated into a positive impact on the manufacturing sector, which grew by a mere 0.6% year-on-year.

 

This disparity is largely due to exports utilising existing inventories, with businesses not replenishing depleted stock.

 

The JSCCIB also voiced significant concerns about the misuse of export privileges and re-exports with minimal local content, noting that these do not genuinely benefit the economy.

 

Even with high export figures, substantial imports persist, while domestic manufacturing, consumption, and private investment fail to keep pace.

 

Furthermore, Thailand's lack of coherent import-export linkages hinders a comprehensive understanding of the economy, impeding concrete solutions for re-export issues.

 


"The JSCCIB is particularly worried about the progress of tariff negotiations between Thailand and the US, where the timeframe remains unclear and the risks are high. This is intrinsically linked to geopolitical issues that could influence the talks. The US's 90-day tariff grace period is set to expire on 8th July," Payong warned.


 

 



 

Debt Relief and Baht Management

The JSCCIB endorsed the extension of the "You Fight, We Help" Phase 1 project registration until 30th June, and the guidelines for Phase 2, which broaden the eligibility for debtors.

 

This includes easing criteria for overdue debt for those who previously restructured their debt under the "Direct Payment to Maintain Assets" scheme, and expanding the debt burden covered by the "Pay, Close, End" measure. 

 

Nevertheless, the JSCCIB stressed the need for subsequent support measures, focusing on income generation and welfare improvements to empower debtors to achieve self-sufficiency post-project, thereby moving beyond perpetual superficial fixes.

 

A key concern for the JSCCIB is the rapid appreciation of the Thai baht, which has strengthened to 32.5-32.7 baht per US dollar.

 

This makes the baht stronger than regional currencies like those of Vietnam, Singapore, and China over the past month, placing Thai businesses at a competitive disadvantage.

 

The JSCCIB believes it is crucial to manage the currency to prevent excessive appreciation or rapid volatility, alongside proactive communication to help businesses adapt swiftly.

 

It is also essential to systematically pass on the benefits of a stronger baht, such as lower import costs for energy and agricultural raw materials, to the manufacturing sector and the public.

 



 

 

Enhancing Business Competitiveness

Finally, the JSCCIB expressed concerns about the competitiveness of Thai entrepreneurs, impacted by the slowing domestic economy, trade war pressures, and the influx of foreign goods.

 

This has led to significant financial liquidity challenges, particularly for SMEs. To alleviate this burden, the JSCCIB has proposed that the government consider reducing the electricity bill deposit for various business categories, including medium-sized enterprises (Category 3), large enterprises (Category 4), and specific businesses like hotels and rental accommodations (Category 5), which collectively hold over 30 billion baht in deposits.


The JSCCIB recommends reducing the deposit to 0.5 times the average electricity bill for prompt payers, down from the Energy Regulatory Commission's (ERC) previous resolution on 28th October 2024, which set it at 0.8 times.

 

A proportionate increase in the deposit could be applied for businesses that default on electricity payments. This reduction in the deposit is expected to significantly enhance businesses' financial liquidity, particularly during times of high economic volatility.

(2025/06/04-00:00)