Thailand might be experiencing a technical recession, as its GDP has contracted for two consecutive quarters, as reported by the Fiscal Policy Office. This economic downturn is primarily attributed to a decline in exports and reduced consumer spending, which have been exacerbated by global uncertainties and domestic challenges.
Key Takeaways
- Thailand may have entered a technical recession, with GDP likely contracting for two straight quarters.
- U.S. tariffs and the Myanmar earthquake have severely disrupted exports and regional trade flows.
- The government is preparing financial support measures and may revise its long-term fiscal strategy.
Pongnakorn Pochakorn, a senior macroeconomics expert at the FPO, said an official revision to the office’s earlier growth forecast will be published on April 28.
The updated outlook comes amid mounting signs of economic stress, exacerbated by global trade tensions and unexpected regional disruptions.
Thailand, whose economy is heavily reliant on exports, is especially vulnerable to such shocks. The combination of U.S. tariffs reportedly as high as 36% on some Thai goods and weakened global demand has likely contributed to the back-to-back quarterly contractions, he said.
Compounding the situation is the fallout from a magnitude 6.1 earthquake that struck Myanmar on March 28, which Pochakorn said had ripple effects on trade and logistics in the region.
These twin external shocks have battered investor sentiment and disrupted cross-border supply chains.
Earlier this year, the FPO projected 3% GDP growth for 2025, buoyed by anticipated gains in public consumption, exports, tourism, and investment.
But with trade negotiations between Bangkok and Washington still unresolved, those expectations now appear increasingly optimistic.
In response, the Ministry of Finance is preparing a suite of support measures through state-owned financial institutions.
These include tailored loan schemes from the Export-Import Bank of Thailand (EXIM), the Government Housing Bank, and the Bank for Agriculture and Agricultural Cooperatives.
The forthcoming revision to the FPO’s forecast may also prompt a reassessment of Thailand’s medium-term fiscal framework, particularly the fiscal plans spanning 2026 to 2029.
The warning underscores growing concerns over Thailand’s economic resilience in an increasingly turbulent global landscape, as policymakers brace for what could be a prolonged period of slower growth.
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