Thailand's Q2 growth beats forecast but faces slowdown in H2 on tariffs
Southeast Asia's second-largest economy grew 2.8 per cent in the April-June quarter from a year earlier, the National Economic and Social Development Council said, beating a Reuters poll forecast of 2.5 per cent, but still below the 3.2 per cent annual increase in the first three months.
The economy grew 3 per cent annually in the first half, and the council adjusted its full-year forecast to 1.8 per cent to 2.3 per cent, from an earlier estimate of 1.3 per cent to 2.3 per cent.
"Exports and manufacturing improved, along with clarity over reciprocal tariffs, so the Thai economy should expand more than our projections in May," the council's head, Danucha Pichayanan, told a news conference.
The U.S. tariff on Thai imports has been set at 19 per cent, in line with regional peers.
"Growth should be good in the remainder (of the year), but will be lower than the previous two quarters," Danucha added. Last year's annual growth of 2.5 per cent lagged other countries in the region.
The council raised its 2025 export growth forecast to 5.5 per cent from 1.8 per cent, after a 15 per cent year-on-year rise in the first half, driven by shippers racing to beat U.S. tariffs. However, exports are expected to taper in the second half.
The United States was Thailand's biggest export market last year, accounting for 18.3 per cent of total shipments, with a value of $55 billion, but there are still uncertainties relating to tariffs on transshipments via Thailand from third countries.
Kobsidthi Silpachai, head of Capital Markets Research at Kasikornbank, said he predicts a final growth rate of just 1.5 per cent for 2025.
"Growth is seen to decelerate markedly post the sugar high of exports front loading," he said, adding that waning tourist numbers and household debt would also weigh heavily on the economy.
The NESDC on Monday also lowered its forecast for foreign tourist arrivals this year by 10 per cent to 33 million.
On Friday, parliament passed the government's 3.78 trillion baht ($116.6 billion) budget bill for the 2026 fiscal year starting on October 1, which is expected to boost economic activity.
The central bank last week also cut its key interest rate by a quarter point to a near three-year low of 1.50 per cent, with more easing expected later this year.
($1 = 32.42 baht)
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