Thailand Economy Slows in 2H25 as US Tariffs Hit Exports

Thailand's economy is expected to slow significantly in the second half of 2025 and into 2026, primarily due to the impact of anticipated increased U.S. tariffs on exports, which are a key growth driver. The Bank of Thailand forecasts a 4 percent contraction in exports in the latter half of 2025 and a 2 percent decline in 2026, with overall economic growth projected at 2.3 percent for 2025 and 1.7 percent for 2026, reflecting growth below the country's potential. Despite a strong start to 2025 driven by front-loaded shipments ahead of tariff changes, the outlook is tempered by weakening private consumption, a decline in foreign tourist arrivals, and structural challenges such as increasing competition and changing consumer behavior. Inflation is expected to remain subdued due to supply-side factors, and monetary policy is viewed as having limited effectiveness in addressing the current economic headwinds. The Bank of Thailand's Monetary Policy Committee voted to keep the policy rate steady at 1.75 percent, emphasizing the need for targeted measures alongside business adaptation to navigate ongoing uncertainties. Consumer confidence has also reached its lowest point in over two years, reflecting concerns about tariffs and domestic political stability.