JSCCIB warns of weak Thai economy, tax talks with US crucial

JSCCIB warns of a weak economy in H2, with concern over US tax talks and political instability. Plans to meet with key agencies to align economic strategies.

Payong Srivanich, Chairman of the Thai Bankers’ Association and Chair of the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), together with Kriengkrai Thiennukul, Chairman of the Federation of Thai Industries (FTI), and Poj Aramwattananont, Chairman of the Thai Chamber of Commerce, jointly announced the outcome of their meeting on Wednesday (July 2), stating that the JSCCIB has revised Thailand's GDP growth forecast for 2025 down to a range of 1.5-2.0%. 

This marks a significant weakening of the economy, contrasting with the Bank of Thailand's forecast of 2.3% growth.

The key negative factors include sluggish domestic demand, fewer Chinese tourists than expected, and political uncertainty that may affect budget disbursements.

"Political stability is crucial, as uncertainty disrupts the domestic economic drivers, particularly exports and government budget spending as planned," they stated.

The JSCCIB further assessed that if Thailand continues to face a 10% tariff from the United States, the economy could grow at around 2.0%. However, if the tariff increases to 18%, GDP growth could decline to approximately 1.5%.

Exports slow and strong baht add pressure

While exports grew by 14.9% in the first five months of the year, the JSCCIB highlighted that this was largely due to a rush in imports before the United States' 90-day tax measure suspension ended. The JSCCIB predicts that exports in the second half of the year are likely to shrink by over 10%, meaning that full-year 2025 export growth may be close to 0%. This could directly impact the manufacturing sector and employment.The situation is further aggravated by the rapid appreciation of the baht, which has strengthened to 32.5 baht per US dollar, stronger than most regional competitors and out of sync with the slowing economy.

As a result, the JSCCIB urgently calls on the Bank of Thailand to reduce interest rates to ease pressure on the baht and stimulate the economy. They also urge the central bank to manage the baht’s stability to align with the actual economic fundamentals.

Furthermore, the JSCCIB pointed out structural issues undermining the country's competitiveness, such as transhipment export issues, the import of low-quality goods, and investment policies that don’t focus on adding value domestically, such as domestic employment creation.

The JSCCIB plans to request meetings with key government economic agencies, including the Bank of Thailand, the National Economic and Social Development Council (NESDC), the Ministry of Finance, and the Ministry of Commerce, to exchange information and urgently work on solutions.

"As the representative of the private sector, the JSCCIB is preparing a plan to propose to government agencies to prioritise key sectors of concern for the next 6 to 12 months, understand the challenges, and drive the country in the same direction to restore confidence."

(2025/07/02-00:00)