With the first month of 2025 passed, the economy still faces uncertainty and unclear growth drivers.
The government set an ambitious target, aiming to increase GDP growth to a range of 3-3.5% this year, banking on tourism, foreign investment and state stimulus measures.
Yet many industries are sceptical about this goal as tourism slows with the low season approaching. Foreign direct investment (FDI) has not reached anticipated levels, while the government's 10,000-baht cash handout was widely criticised by analysts as a feeble attempt to generate economic momentum.
Prime Minister Paetongtarn Shinawatra and Finance Minister Pichai Chunhavajira launch the second phase of 10,000-baht handout programme. Chanat Katanyu
DIFFICULT YEAR
The public and private sectors will face uphill tasks in driving GDP growth in 2025 as the economy grapples with both internal and external challenges, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI).
The country continues to struggle with a high level of household debt, hampering many business sectors such as automotive, while the US-China trade war could have an adverse impact on Thailand, he said.
Given this backdrop, the Joint Standing Committee on Commerce, Industry and Banking projected GDP growth in a range of 2.4-2.9% this year.
"We don't expect GDP growth to exceed 2.9%," said Mr Kriengkrai.
The FTI's Automotive Industry Club predicts Thailand's car manufacturing output will remain unchanged at 1.5 million vehicles this year, equal to the level last year, as banks and car financing companies maintain strict lending criteria to avoid non-performing loans.
Financiers are concerned about a household debt-to-GDP ratio of 90% as of last year's third quarter.
Other industries are worried about the influx of low-cost Chinese imports into Southeast Asia, as China faces new tariffs imposed by US President Donald Trump earlier this month.
Washington slapped an additional 10% tariff on Chinese products on Feb 4, drawing countermeasures from Beijing, which include a 15% tariff on imports of US coal and liquefied natural gas.
The tit for tat between the world's two largest economies could prompt Chinese firms to reroute their exports to Southeast Asia, said Mr Kriengkrai. This means Chinese products, some of them low-quality, may flood the region's market, he said.
Thailand's market share in Southeast Asia has already decreased because it cannot compete with inexpensive products from China, said Mr Kriengkrai. An FTI report found 25 Thai industries have been affected and the number is expected to increase to 30 this year, he said.
"However, we still have a positive outlook for the economy, with a growth projection of 2.4-2.9%, export gain of 1.5-2.5% and inflation of 0.8-1.2%," said Mr Kriengkrai.
To expand GDP, he said entrepreneurs cannot solely act as original equipment manufacturers, making products for other brands. They need to adopt modern technologies to become original design producers, designing and making products for other companies.
"They also need to learn how to be original brand manufacturers who make and sell products under their own brands in order to add value to their products," said Mr Kriengkrai.
Somnuek Tanthathoedtham, managing director of property developer N.C. Housing Plc, said the first half of 2025 is a period of market adjustment for the property sector following last year's slowdown.
"The residential sector faced significant challenges across all segments last year, starting with the mid- to lower-end segment, before spreading to the upper-end segment," he said. "Economic growth also fell short of expectations."
Mr Somnuek said the tourism sector may improve, but economic recovery still depends on timely government spending to enhance liquidity in the system.
"With purchasing power still under pressure, the property sector is expected to have a gradual recovery in the second half," he said.
Mr Somnuek said many developers adjusted last year and several emerging trends became normalised, such as banks' mortgage rejection rates rising to 40-50% from 20%.
"Developers must reevaluate and adjust their business strategies to align with market purchasing power, while adopting effective marketing measures to support themselves," he said.
The government's GDP growth target is 3.5% this year, which many industry leaders describe as ambitious. Pattarapong Chatpattarasill
ACHIEVABLE WITH CONDITIONS
Thienprasit Chaiyapatranun, president of the Thai Hotels Association, said the target of 3.5% GDP growth is similar to the ambitious government goal for tourism revenue of 3.5 trillion baht, up from 2.62 trillion last year.
He said the GDP target is quite challenging amid current economic conditions. The government has a lot of hard work to do, but should be able to create more effective tools to reach these goals, said Mr Thienprasit.
However, he cautioned a heavy reliance on tourism would be difficult as the low season looms.
Bill Barnett, managing director of hospitality consultancy C9 Hotelworks, said 3.5% GDP growth is achievable, bolstered by the tourism industry, particularly Asian markets.
He said geopolitical conflicts and global migration trends would drive foreigners to look for a second home in Thailand as the country offers several long-term visa schemes and is well-equipped with components for families, such as international schools. However, to sustainably grow the tourism industry, the government should prioritise improving infrastructure, outlining a master plan and proper zoning for the whole country, said Mr Barnett.
Wutthiphum Jurangkool, chief executive of Nok Air, said the 10,000-baht handout for the elderly is expected to lift the economy to a certain level, but would not significantly benefit the travel industry as recipients are likely to pay for necessities rather than leisure.
He said if the foreign exchange rate and fuel prices do not fluctuate much, the airline's expenses and airfares should stabilise, which could eventually encourage more people to take trips.
Thais queue to withdraw money from the government handout scheme at the Bank for Agriculture and Agricultural Cooperatives in Buri Ram. More stimulus may be needed to reach the state's growth target. Surachai Piraksa
AGRICULTURE IN FOCUS
Thaniwan Kulmongkol, president of the Thai Restaurant Association, said the government should shift its focus to the potential of the agricultural sector, which boasts a diverse range of products. Despite this potential, she said exports of processed agricultural products have not reached their full capacity and she advocated for enhanced state support for this sector's processing activities.
"This will lead to job creation and improve income distribution in this sector," said Ms Thaniwan.
For the restaurant sector, she said operators reported a decline in purchasing power. The country needs more stimulus measures to revive weak spending power, said Ms Thaniwan.
She praised the previous government's "Khon La Khrueng" co-payment subsidy scheme, calling it the most effective campaign to champion the restaurant industry. The government subsidised 50% of food, drinks and general goods purchases for participants, up to 150 baht per person per day.
However, Ms Thaniwan said it is unlikely the scheme will be reintroduced because of the government's constrained budget and the country is not in a crisis as it was during the pandemic.
Ms Thaniwan also highlighted price volatility for restaurateurs, with coriander soaring from less than 100 baht per kilogramme in February last year to 200 baht in September, then diving to 40-50 baht at present, according to talaadthai.com.
She encouraged the government to collaborate with operators on solutions such as futures contracts to mitigate cost risks.
Ms Thaniwan is optimistic about restaurant industry growth this year, although the uptick will stem primarily from rising costs related to raw materials, energy and labour. As a consequence, the average bill per consumer is expected to increase, driving the industry's value higher.
Despite this anticipated value growth, most restaurants expect their sales to remain flat, she said.
A street food vendor walks past closed shops in Pattaya. (photo : Somchai Poomlard)
A DAUNTING TASK
Nattaporn Triratanasirikul, deputy managing director of Kasikorn Research Center (K-Research), said the think tank is maintaining its forecast for 2025 GDP growth at 2.4%, primarily driven by the tourism sector, with foreign arrivals expected to reach 37.5 million this year.
If the government wants to increase this tally by 500,000, it should introduce more measures to attract foreign tourists, she said, as global demand weakens and there is heightened competition, increased uncertainties and sluggish economic growth worldwide.
Ms Nattaporn said a major challenge to the economy is the potential escalation of US trade tensions under the Trump administration. US tariff hikes, which broadly impact trade partners, are being implemented faster than expected following increases on steel and aluminium to 25% from the previous 10%.
She said the first two phases of the government's digital wallet scheme are expected to contribute 0.3 percentage points to GDP growth. The third phase combined with the Easy E-Receipt scheme should further support economic growth, said Ms Nattaporn.
If the government adjusts the conditions of the digital wallet scheme by allowing digital money to be converted into cash, it would expand the multiplier effect more than existing conditions, according to K-Research.
"We expect economic growth to improve in the first half this year, supported by government stimulus measures. However, in the latter half the economy is likely to face greater uncertainties and challenges, primarily caused by the impact of Trump's trade policies," she said.
SCB Economic Intelligence Center (EIC), a research unit under Siam Commercial Bank, maintained its GDP growth forecast at 2.4% for 2025, citing tourism and exports as key drivers. Thitima Chucherd, head of economic and financial market research at the EIC, said export demand should surge in the first half of the year as Thai trade partners accelerate orders ahead of US tariff measures in the second half.
"Given the uncertainties and challenges in the second half of the year, 3% GDP growth this year will not be easy," she said.
The EIC plans to monitor government stimulus measures and US trade policies, adjusting its economic growth assessment accordingly.
LONG-TERM POTENTIAL
The 3.5% growth target exceeds Thailand's long-term potential growth rate of 2.7%, as estimated by the think tank, said Poonyawat Sreesing, senior economist at the EIC.
"This means in addition to effective fiscal policy and a limited impact from US tariffs, Thailand needs structural improvements to lift the nation's potential. Such improvements should be implemented in four areas as soon as possible," he said.
Comprehensive and adequate social assistance and social insurance mechanisms are needed, while household consumption should be raised while managing debt risks, said Mr Poonyawat.
The competitiveness of the business sector must be strengthened to regain confidence and attract FDI inflows by promoting trade competition and expediting the regulatory guillotine, he said.
Mr Poonyawat also recommended enhanced national investment strategies, especially related to digital and green infrastructure, to suit changing global trends. Sustainability in the real sector has to improve, with the government serving as a facilitator to enable businesses to efficiently adapt to global trends, he said.
Intensifying trade protectionism under the Trump regime could slow export growth, especially in the second half, according to the EIC, potentially flooding the local market with Chinese goods, pressuring the competitiveness of Thai products in both domestic and global markets.
Domestic demand could continue to weaken, especially private consumption, from the limited recovery of household income and persistent household debt amid financial institutions' cautious credit standards, said Mr Poonyawat.
"However, growth could exceed 3% if an effective fiscal stimulus is launched. For example, the third phase of cash handouts must ensure that all recipients are likely to spend it in the formal economy, with small leakage into the informal sector, savings or debt repayment, to maximise the impact," he told the Bangkok Post.
If Trump spares Thailand from new tariffs or trade restrictions, there are opportunities for trade diversions, said Mr Poonyawat.