Thailand Economy Struggles to Regain Momentum
Thailand’s economy is slowing. The World Bank has revised its 2025 growth forecast downward to just 1.8%. Weak global demand, slower tourism recovery, and declining investment have dampened expectations.
Tourism, once a strong growth engine, remains fragile. Before COVID-19, tourism contributed nearly 20% to Thailand’s GDP. In early 2023, arrivals reached 6.5 million. Officials hope to hit 25 million by year-end. Yet that still lags behind the 2019 record of 39.8 million visitors. Fewer Chinese tourists and global economic risks continue to weigh down the sector. Full recovery may not arrive until mid-2025.
Thailand’s export performance tells a mixed story. While total exports rose 12.3% in Q1 2025, production of vehicles and electronics has shrunk. Global trade tensions, especially over tariffs, pose a growing threat. In a high-tariff scenario, Thailand’s economy may grow a measly 1.3% next year.
Domestic consumption, once a bright spot, is weakening. Growth fell from 5.4% in early 2023 to 2.6% by Q1 2025. Household debt is now 87% of GDP. Nearly 40% of households depend on high-interest informal loans. That severely limits spending. Private investment has declined for four straight quarters.
Current Thai political situation far from stable
Thailand’s structural problems are deepening. Between 1960 and 1996, the economy grew an average of 7.5% per year. Since 2013, that figure has fallen to 1.9%. Low productivity, an aging population, and income inequality remain key obstacles. Thailand now lags behind peers like Vietnam and Indonesia.
The political situation although now stable is far from fully resolved. Political risk also hurts investor confidence. The current government has tried stimulus efforts such as cash handouts. These are meant to aim to boost spending. However, its not done much. Furthermore, reports say the fiscal deficit could rise to 3.6% of GDP in 2025. Meanwhile, the central bank has kept interest rates at 2.25% to manage debt pressures.
Despite these challenges, Thailand’s economy shows some resilience. Poverty and inequality have declined slightly. New initiatives like Thailand 4.0 and the Eastern Economic Corridor could help. However, unless bold reforms follow, Thailand’s economy may fall further behind ASEAN competitors.
