2025: Year of uncertainties and risks
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2025: Year of uncertainties and risks

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Tourists take a cruise on the Chao Praya River in Bangkok on Dec 19 last year. (Photo: AFP)
Tourists take a cruise on the Chao Praya River in Bangkok on Dec 19 last year. (Photo: AFP)

The Year of the Snake will be a challenging one for most countries as it will be filled with uncertainties and risks as geopolitical tensions intensify and deglobalisation accelerates. With President Donald Trump resuming the US presidency, the rise of trade and technology wars will disrupt trade and growth in many countries. Moreover, the geopolitical tensions in several key world hotspots may heighten the chance of wars. Nevertheless, amid the economic challenges, there are opportunities for the relocation of investments, which can be achieved if Thailand proves ready for them.

The Thai economy this year will continue to recover, while many risks to the recovery loom. The Thai economy will continue to grow at 2.5-3.0% this year, similar to its expansion of around 2.8% in 2024. Inflation is forecast by the Bank of Thailand to be around 1%. Given the low inflation, the policy rate may be reduced by 0.25% to 2.0% this year. The baht may weaken slightly to 35 to the US dollar on average but will be volatile through the year.

Nevertheless, growth will be uneven among different industries. The exporting industries, as well as tourism and domestic manufacturing, may face slower growth this year, while those related to investments, both private and public, will likely speed up.

Exports, which were at a record high last year, will grow slower this year compared to last year. In 2024, export value in US dollar terms expanded by over 4% year-on-year reaching US$300 billion. Major exports ranged from computers and parts, cars, vehicle parts, food products, air-conditioners, jewellery, iron and steel, chemical and petrochemical products, and apparel and textiles. Exports have expanded most rapidly in double digits to the United States, Thailand's largest export market.

This is partly due to the ongoing trade war between the US and China, which has enabled Thai exports to replace Chinese products and raise their market share in the US since 2018. In anticipation of a heightened US trade war and higher import tariffs in 2025, US importers also increased orders for Thai exports in the second half of 2024.

Thai exports in 2025 will most likely grow by 1-2% as trade wars increase globally. As the new US administration embarks on a trade war with trading partners that have trade surpluses with the US, Thailand will be one of the countries that the US may target. Thailand's trade surplus with the US ranks in the top 15 among US trading partners. Should US tariffs on Thai exports be raised, export growth to the US could slow down this year. However, if tariff rates that will be levied on China or Vietnam are much higher than those on Thailand, Thai exports may still be able to compete in the US market. Thai exports to other major markets -- China, Japan, and Europe -- may also slow down this year as the global trade wars affect their economies.

Tourism will continue to grow this year but at a slower rate than last year. In 2024, there were 35.5 million tourist arrivals compared to 26 million in 2023. However, spending per tourist is below that of the pre-Covid period. This year, tourist arrivals, mostly from China, Europe, and Malaysia, are expected to reach the pre-Covid level of 40 million, with spending per tourist rising closer to pre-Covid levels.

Investment by the business sector should grow more than last year, supported by the relocation of foreign direct investment amid the trade war. Investment last year was below that of 2023 as pickup truck purchases and construction contracted with a slump in the property sector. This year, investments by firms should pick up as the approval of investments by the Board of Investment (BOI) since 2023 starts to translate into investments this year. In 2024, BOI approvals reached Bt800 billion, a ten-year high. The top three sectors that have the highest approvals are electrical appliances and electronics, including printed circuit boards, electric vehicles and machinery, and food and biotechnology products such as bio-fuels and bio-plastics.

Government spending will be more than last year as the budget is disbursed on schedule. In FY2024, the budget was delayed by eight months from October 2023 to May 2024, reducing public investments in the first five months of last year. In FY2025, the budget has capital expenditure of Bt9.8 billion, rising by 28% from that in FY2024. Coupled with no delays in disbursements in 2025, public investment could rise by more than 30% compared to 2024. The second and third tranches of the Bt10,000 Digital Wallet Scheme, amounting to around Bt300 billion, will also be transferred to around 30 million Thais above 16 years old this year, after the first tranche of Bt140 billion last year.

Consumption by Thai households this year will be supported by the continued gradual recovery of incomes and government transfers through the Digital Wallet Scheme. However, household debt of almost 90% of GDP coupled with being an "ageing" society will continue to slow down consumption purchases of Thai households. Hence, consumption growth this year will be slower than last year.

There are many risks this year that may slow down Thailand's growth, namely, the flood of Chinese imports, geopolitical tensions in the Middle East, and domestic political uncertainties. Chinese exports to Thailand have accelerated since 2022, mainly in raw materials, parts, and capital equipment. They will continue to rise as the US-China trade war escalates and Chinese investment in Thailand grows. This presents opportunities for cost reduction for users of the imports but will be a greater threat to firms that are their competitors in Thailand.

Geopolitical tensions in the Middle East could lead to energy disruptions and higher prices. This would raise energy prices in Thailand but also overall prices or inflation. Lastly, in addition to uncertainties in the global economy, uncertainty surrounding the stability of the Thai government can reduce confidence among new investors and new industries.

Thus, in this Snake Year of uncertainties and risks, individuals and companies must raise their resilience to shocks and disruptions.


Kirida Bhaopichitr, PhD, is a Research Director for International Economics and Development Policy and Director for the TDRI Economic Intelligence Service (TDRI EIS).

Kirida Bhaopichitr

TDRI Research Director

Kirida Bhaopichitr PhD is research director for the International Research & Advisory Service, Thailand Development Research Institute (TDRI). Policy analyses from the TDRI appear in the 'Bangkok Post' on alternate Wednesdays.

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