The Ministry of Finance has cut its forecast for Thailand’s economic growth this year to 2.1% from 3%, saying that the impact of US tariffs and a global slowdown would weigh on Southeast Asia's second-largest economy.
However, if the US eventually chooses to impose only a 10% tariff on Thai imports rather than the announced 36%, gross domestic product (GDP) growth could reach 2.5%, said Pornchai Thiraveja, director-general of the Fiscal Policy Office.
Exports, a key driver of Thai growth, are seen as rising 2.3% this year, down from an earlier forecast of 4.4%, he told a press conference.
The forecasts came a day after the Bank of Thailand cut interest rates at a second consecutive meeting and lowered its own forecasts for the economy this year.
The central bank expects the economy to grow by 2% in a best-case scenario, and 1.3% if the impact of US tariffs is pronounced.
The ministry lowered its forecast for foreign tourist arrivals, another key driver of growth, to 36.5 million this year from a previous estimate of 38.5 million. The lower figure would still represent modest 2.7% growth from 2024.
Now that Thailand’s economic outlook hangs in the balance, the government needs to expedite the disbursement of the 2025 fiscal budget to support economic activity, said Mr Pornchai.
For the 2025 fiscal year, the government aims for a disbursement rate of 94.4%, with current expenditure targeted at 101% and capital investment at 74.8%, he said.
While Thai exports in US dollar terms are forecast to grow by 2.3%, with direct pressure from US tariffs taken into account, the postponement of the US reciprocal tariffs until early July, along with exemptions on certain items including electronics and computers, has slightly eased the burden, said Mr Pornchai.
Despite all the uncertainty about US trade policy, Thailand’s domestic consumption remains a bright spot, with private consumption projected to grow by 3.2%, thanks to rising purchasing power and a recovery in tourism, he said.
Private investment is forecast to grow by 0.4%, while government consumption is projected to rise by 1.2% and public investment by 2.8%, boosted by continued infrastructure spending in the third and fourth quarters of fiscal 2025 and into the first quarter of fiscal year 2026, he said.