Thai growth projections upgraded on lower US tariffs

Bangkok Post

16 hours ago

The local private sector has increased its forecast for Thai GDP growth this year to 1.8-2.2%, rising from an estimate of 1.5-2% following the recent US decision to reduce tariffs on imports from Thailand from 36% to 19%.
At its meeting on Wednesday, the Joint Standing Committee on Commerce, Industry and Banking cited the US tariff reduction as a key factor contributing to the improved economic outlook.
The committee also upgraded its forecast for Thai export growth from -0.5% to 0.3%, rising to a more optimistic 2-3% growth, aligning with positive global economic signals after the latest US tariff announcements for many other countries.
Payong Srivanich, chairman of the Thai Bankers' Association, said the 19% reciprocal tariff imposed on Thai goods helps the nation avoid the worst-case scenario of losing competitiveness against neighbouring countries, which are now subject to similar tariff levels.
However, Mr Payong cautioned that economic growth in the second half of the year is expected to slow, largely due to persistent export challenges.
Headwinds include intensified price competition from import surges, declining foreign arrivals and tourism revenue, and the ongoing Thailand-Cambodia border conflict - all of which could dampen economic performance in the latter half of the year.
In addition, Mr Payong said, Thailand is likely to face greater challenges from the final quarter of this year into early 2026. Given this outlook, Thailand needs to pursue business and economic reforms to better prepare for long-term uncertainties, Mr Payong said.
Kriengkrai Thiennukul, chairman of the Federation of Thai Industries, said the US tariff policy should serve as a wake-up call for Thailand to strengthen its long-term competitiveness, particularly in the manufacturing sector and small and medium-sized enterprises.
He called for industrial restructuring and identification of priority sectors aligned with national strategies. Thai manufacturers must enhance production processes across supply chains and upstream industries to increase local content, improve productivity and reduce costs.
Adoption of technology and innovation, along with workforce upskilling, including both Thai and migrant workers, was essential to building real economic value.
Mr Kriengkrai said the private sector is ready to cooperate with the government, especially in providing data support.
Thailand lacks critical industry-level structural data, such as the usage of primary and intermediate raw materials and regional value content, he said.
To comply with new US export requirements, the private sector has begun collecting baseline data.
However, to develop a comprehensive and reliable database, cooperation from public sector agencies is essential. Such data will be critical for policy decisions and international negotiations in the evolving global trade landscape, Mr Kriengkrai said.
Poj Aramwattananont, chairman of the Thai Chamber of Commerce, said that despite a US tariff rate regarded as consistent for the region, Thailand still requires economic adjustments in both the short and long term.
In the near term, price competition is expected to intensify for both Thai exports and domestic products, which will face growing pressure from increased import competition due to expanded market access, he warned.