Thai exports are expected to post marginal growth or contract this year and next, largely due to the anticipated US tariff hikes set to commence in the second half of 2025.
The Bank of Thailand's Monetary Policy Committee (MPC) projects that under a lower-tariff scenario, the value of merchandise exports will grow by 0.8% year-on-year in 2025. However, in 2026 exports are expected to decline by 2.8%.
Under a higher-tariff scenario, Thai exports are forecast to decline both this year and next, falling by 1.3% in 2025 and by 7% in 2026, according to the MPC after its meeting on April 30.
Global trade policies and economic crises are typically the main factors influencing Thailand's export performance and placing downward pressure on the country's GDP growth. Historically, Thai exports contracted by 13.4% during the global financial crisis in 2009, by 3.3% in the first trade war in 2019, and by 6.5% in 2020 during the pandemic.
The central bank expects the US tariff measures to impact Thailand via three main channels: a direct impact on exports to the US; an indirect impact via supply chains linked to US exports; and a broader global economic slowdown.
Under these assumptions, the impact on exports is expected to reduce Thailand's GDP over a one-year period by 0.4 percentage points under the lower-tariff scenario, and by 1 percentage point under the higher-tariff scenario, noted the regulator.
Krungthai Compass, the research arm of Krungthai Bank (KTB), also revised its export forecast for 2025 in line with the central bank's outlook. Previously the research unit estimated Thai export growth to stand at 2% for this year.
If a universal 10% US tariff is imposed in the second quarter of this year following the 90-day pause, Krungthai Compass forecasts Thai exports will grow by just 0.9% in 2025. However, if a 10% universal tariff is accompanied by a reciprocal tariff rate of 36%, starting from the same period, exports are expected to contract by 1.5%.
The research centre also warned that higher US tariffs could have lasting negative effects on the Thai economy, creating "economic scarring" similar to the effects experienced during the pandemic.
"Export contraction during the pandemic significantly delayed the country's economic recovery, taking more than four years for the economy to return to pre-pandemic levels," noted Krungthai Compass.
Small and medium-sized enterprises (SMEs) are expected to be among the hardest hit. Those integrated into global supply chains involving tariff-targeted products, as well as already vulnerable SMEs, are particularly at risk.
Krungthai Compass forecasts roughly 4,990 local SMEs could be directly affected. These firms collectively contribute value-added exports equivalent to about 2.2% of Thailand's GDP, a level considered significant to the national economy.
They are expected to be impacted by a rise in average import tariff rates from 1.7% to 9.3%.