Bangkok: The Bank of Thailand has acknowledged that economic growth is expected to decelerate in the latter half of 2025, extending into the following year.
According to Thai News Agency, a spokesperson from the Bank of Thailand reported that GDP growth in Q2 2015 was close to 3%, but the Thai-Cambodian border conflict and flooding in the northern regions have impacted the Q3 economy. The spokesperson is also monitoring the implications of recent U.S. tariff negotiations, after an agreement announced by Trump suggested rates would align with those in other regions.
Ms. Chayawadee Chaianan, Assistant Governor for Corporate Affairs and spokesperson for the Bank of Thailand, shared at the BOT Monthly Briefing that the Thai economy experienced a slowdown in June 2025 compared to the previous month. Merchandise exports decreased by 4.8% and manufacturing declined following earlier acceleration. The tourism sector saw a reduction in activities, with tourist numbers falling by 2.8%. Despite this, government spending and private investment continued to grow, with private investment rising by 0.7% due to machinery and equipment investments, and government spending increasing by 2.1%. Headline inflation dropped by 0.25%, influenced by fresh food prices, while core inflation remained steady at 1.06%.
In Q2 2025, the economy expanded at a rate similar to the first quarter, nearly reaching 3%, supported by exports, industrial production, government spending, and private investment. However, tourism activities slowed, mirroring the drop in foreign tourist arrivals. Headline inflation decreased, driven by lower energy prices in line with global crude oil trends, while core inflation saw a slight uptick due to food cost pass-through. The labor market remained stable, with an improvement in the number of insured individuals, although there was a rise in job applicants.
The anticipated economic slowdown is attributed to global trade policy impacts on exports, agricultural and industrial textile production, and related labor income. This also includes a potential decrease in tourist numbers. Monitoring will be crucial for Thailand's trade negotiations with the U.S., the situation with Cambodia, tourism trends, northern flooding impacts, and government economic innovations.
Ms. Chanyawadee addressed concerns about the impact of U.S. import tariffs, expressing confidence that Thailand will strive for favorable tariff agreements. She expects Thailand's tariffs to be comparable to regional standards, but should they be higher, a review of export shares to the U.S. by industry will be needed to assess economic impacts. Additionally, major trading partners like China have yet to announce their tariff plans.
The export sector's slowdown in June is likely to persist into the third and fourth quarters, extending into next year. The situation at the Thai-Cambodian border will also require close monitoring due to its economic and confidence impacts.
Despite these challenges, the Thai economy performed well in the year's first half, aligning with the Bank of Thailand's projections. However, the second half anticipates a slowdown due to high risks and uncertainties. The current policy interest rate is deemed sufficient to support the economy, with the Bank of Thailand working with government and private sectors on supportive measures. All risk factors will be evaluated at the Monetary Policy Committee meeting in August.