Thai economy expected to slow in H2 2025, central bank says.

Thailand's economy is expected to slow in the second half of 2025 due to US-imposed tariffs on Thai exports, which are forecast to contract 4% YoY. The central bank predicts growth of 2.3% this year and 1.7% in 2026. Exports rose 14.9% in the first five months of 2025, but are forecast to decline 2% next year. The Bank of Thailand has kept the one-day repurchase rate unchanged at 1.75%.

Thailand's economy is expected to slow in the second half of 2025 due to US-imposed tariffs on Thai exports, which are forecast to contract 4% year-over-year (YoY). The central bank predicts growth of 2.3% this year and 1.7% in 2026. Exports rose 14.9% in the first five months of 2025, but are forecast to decline 2% next year. The Bank of Thailand has kept the one-day repurchase rate unchanged at 1.75%.

Thailand faces a 36% tariff from the US starting August 1, 2025, impacting industries and exports. This move raises concerns about economic instability and foreign investment shifts [1]. The high tariff rate is expected to impact Thailand's production and export costs, especially with competitors such as Vietnam having a lower tariff. There are growing concerns that foreign investors, particularly from China and Japan, may relocate their production bases to countries with lower tariffs, further weakening Thailand’s manufacturing sector [1].

Thailand is making a final push to avoid the steep U.S. export tariffs by offering significantly greater market access to American goods and stepping up purchases of U.S. energy and Boeing aircraft [2]. The move comes just ahead of the July 9 deadline to resolve a trade dispute that could see Washington impose a 36% levy on Thai exports. Thailand aims to cut its US$46 billion trade surplus with the United States by 70% within five years, reaching trade balance in seven to eight years [2].

Thailand's gross domestic product could contract by 1.1% this year if the United States proceeds with imposing 36% tariffs on Thai imports from August 1, according to leading economists [3]. The economists urged the government to implement emergency monetary and fiscal measures. The 36% tariff rate would severely impact confidence and investment climate, placing Thailand at a significant disadvantage compared to competing countries like Vietnam [3].

The trade standoff comes amid political instability following the court-ordered suspension of Prime Minister Paetongtarn Shinawatra, which has unsettled investors. A breakthrough in talks with Washington would help restore confidence and provide a buffer against external shocks [2].

The US tariffs pose a significant challenge to Thailand’s export-driven economy, which is already strained by Southeast Asia’s highest household debt and weak domestic demand. Failure to secure a deal could reduce Thai GDP growth by up to 1 percentage point [2].

References:

[1] https://www.nationthailand.com/business/economy/40052276
[2] https://caliber.az/en/post/thailand-races-to-avert-us-tariffs-with-sweeping-trade-offer
[3] https://www.nationthailand.com/business/economy/40052298