Bangkok: SCB EIC has retained its 2025 GDP forecast for Thailand at 2.4%, citing potential risks stemming from the economic policies under President Trump’s second term. The policies are anticipated to exacerbate existing economic challenges and debt issues in Thailand. The Monetary Policy Committee (MPC) might cut interest rates twice, potentially ending at 1.5%. Additionally, the proposal by former Prime Minister Thaksin Shinawatra to buy people’s debt remains unclear regarding its funding and impact.
According to Thai News Agency, Mr. Yanyong Thaicharoen, Chief Economic and Sustainability Research Officer at SCB EIC, discussed the Thai economic outlook for the first quarter of 2025. He emphasized the heightened global uncertainty due to President Trump’s policies, which may involve increasing specific import tariffs. These policies could lead to a rise in the average US import tax rate by approximately 11%, prompting a retaliatory increase in import taxes by US trading partners. This situation might decrease the global economy by 1.3% and elevate global inflation by 0.5% in the medium term.
SCB EIC projects that the Thai economy will be pressured by the US trade protectionist policy, affecting Thai exports and private investments. Despite support from the tourism sector and government investment projects, the Thai economy is vulnerable due to its reliance on the US market and increased imports from China. The manufacturing sector is expected to recover slowly, with significant imports from China impacting domestic production.
The SCB EIC highlighted that the Thai economy is recovering slowly, ranked among the lowest globally, due to structural issues exacerbated by COVID-19. The economy faces multi-dimensional scars, such as business income disparities, labor market challenges, high household debt, and fiscal constraints. The MPC may cut interest rates further to support the economy, considering tight financial conditions and the impact of US trade policies.
Looking ahead, SCB EIC emphasizes the need for Thailand to strengthen its internal economy while addressing external uncertainties. Thai businesses must adapt to the challenges posed by Trump’s policies by diversifying markets, enhancing product value, and improving production efficiency.
Mr. Yanyong also addressed former Prime Minister Thaksin’s proposal to alleviate household debt by buying debts out of the banking system. The policy’s clarity and funding sources remain uncertain. There is a need for integrated solutions to the debt problem, considering potential financial burdens and moral hazards.
The Ministry of Finance’s initiative for banks to increase new loans aligns with the demand and supply dynamics in the financial sector. Confidence-building measures in the economic system could encourage borrowing and support economic recovery.
