Thailand has cut its 2025 economic growth forecast as escalating trade tensions with the United States and a slowdown in key tourism markets cloud the country’s recovery prospects.
The Office of the National Economic and Social Development Council (NESDC) announced Monday that GDP grew 3.1% year-on-year in Q1 2025, buoyed by resilient domestic consumption and modest export gains.
However, citing intensifying global uncertainty, officials revised the full-year growth projection downward to a range of 1.3% to 2.3%, from an earlier 2.3% to 3.3%.
A major headwind is the looming threat of a 36% U.S. tariff on Thai exports, part of former President Donald Trump’s proposed “reciprocal tariff” plan targeting countries with trade surpluses against the United States. Negotiations to avoid the levy are ongoing, but no breakthrough is expected before July.
“The trade talks remain unresolved, and many countries—including Thailand—are in line for separate discussions,” said NESDC Secretary-General Danucha Pichayanan. “This uncertainty is already causing the private sector to delay investment decisions.”
According to Reuters and Bloomberg, Thailand is one of several export-reliant economies bracing for impact, alongside Vietnam, Malaysia, and Mexico, all of which have significant exposure to the U.S. market.
In another blow to recovery hopes, Thai authorities lowered the 2025 tourist arrival forecast to 37 million from 38 million, citing a weaker-than-expected rebound from China, historically the country’s largest source of international visitors.
Despite easing visa requirements and targeted travel campaigns, the first quarter saw a marked decline in Chinese arrivals, with analysts blaming a sluggish Chinese economy, high travel costs, and persistent safety concerns.
Tourism is a cornerstone of Thailand’s economy, accounting for nearly 20% of GDP pre-pandemic. The downgrade puts pressure on the government’s strategy to diversify tourism markets and boost domestic spending.
The NESDC cautioned that economic momentum is expected to slow further in the second quarter as businesses adopt a wait-and-see stance. Investment delays and soft external demand could weigh on industrial output, even as the government rolls out modest fiscal stimulus to support growth.
“Policy certainty, especially around global trade, will be crucial to restoring investor confidence,” said one Bangkok-based economist quoted by Nikkei Asia.
While Thailand’s fundamentals remain intact, the twin threats of protectionism and tourism volatility underscore the vulnerability of emerging markets in an increasingly fragmented global economy.
