Thailand’s economy is expected to grow just over 2.5% this year, below earlier forecasts, according to the BoT’s latest meeting minutes.
Thailand’s economy is facing challenges from weaker global demand and slower-than-expected recovery in the tourism sector, key factors contributing to the downward revision in growth forecasts. The Bank of Thailand (BoT) also highlighted concerns over rising household debt levels and global economic uncertainties, which may further weigh on domestic consumption and investment.
Key takeaways
- Thailand’s economy is expected to grow just above 2.5% in 2025, falling short of earlier projections.
- The Bank of Thailand cut interest rates to 2.00% to ease credit conditions amid an uneven recovery.
- High household debt and structural challenges in manufacturing continue to hinder economic growth.
The recovery has become increasingly uneven across sectors, prompting policymakers to adjust their approach.
At the meeting, the BoT’s monetary policy committee voted 6-1 to cut the one-day repurchase rate by 25 basis points to 2.00%, with one member favoring no change.
The surprise rate cut follows a pause in December and a similar reduction in October. In December, the central bank had projected 2.9% growth for the year, but now sees downside risks ahead.
According to the minutes, most committee members supported the rate cut to ease credit conditions, believing that the 2.00% level still provides enough policy space.
However, Thailand continues to struggle with high household debt, which stood at 16.34 trillion baht ($486 billion) at the end of September 2024, equivalent to 89% of GDP, one of the highest levels in Asia.
The government sees this as a key obstacle to consumption and economic expansion.
While tourism and exports have shown growth, the manufacturing sector, particularly the automotive and real estate industries, has weakened further due to structural challenges.
The committee acknowledged that Thailand’s economic slowdown is driven by deeper structural factors, requiring supply-side reforms rather than just monetary policy adjustments.
The sole member who voted to maintain the rate argued that monetary policy has limited effectiveness in addressing these long-term issues and is mainly a tool for managing demand.
Bank of Thailand Governor Sethaput Suthiwartnarueput stated last week that the current 2.00% rate is appropriate for the economic outlook and that the central bank does not intend to make frequent adjustments.
The government aims for 3% growth this year and hopes to exceed that through a $4.4 billion stimulus package and other measures to boost economic activity.
Southeast Asia’s second-largest economy grew 2.5% in 2024, lagging behind its regional peers. The central bank’s next interest rate review is scheduled for April 30.
