# Thailand Faces Growing Economic Uncertainty - Link: https://www.thailand-business-news.com/economics/205284-thailand-faces-growing-economic-uncertainty - Published: 2025-04-10T08:27:00+07:00 - Author: J. Allan Burin Adulwattana, the Managing Director and Chief Economist at Kasikorn Research Center (KResearch), has expressed concerns regarding the economic prospects of Thailand. ## Key takeaways * Thailand’s economic outlook is weakening, with a GDP forecast of 2.4% in 2025, as weak domestic demand and the trade war increase risks. * Trump’s “Tariff 2.0” policy threatens Thai exports, with potential GDP contractions if tariffs exceed 10%, impacting key industries like electronics and automotive. * The informal economy is expanding, but integrating it into the formal sector is crucial to driving sustainable economic growth. The GDP forecast for 2025 stands at 2.4%, with downside risks primarily due to the ongoing trade war. The lack of positive factors and weak domestic demand have led to Thailand being labeled the “Sick Man of Asia.”  ADVERTISEMENT Given these challenges, Burin emphasized the urgent need for immediate policies, including debt resolution measures. The economist highlighted that lower-income groups are struggling with both consumption and debt repayment.  To address this issue, he stressed the importance of stimulating spending among those with purchasing power and attracting foreign investment to strengthen GDP. Despite the overall economic slowdown, Burin pointed out that the informal economy continues to expand, handling significant amounts of money.  One of the key factors affecting the Thai economy is Donald Trump’s “Tariff 2.0” policy, which includes tariff increases. While the estimated impact on GDP is 0.3%, a tariff hike of 10% or more on Thai exports could cause more significant damage. Greater clarity on these policies is expected after April 2. Amid the growing U.S. trade deficit and public debt, the so-called “Mar-a-Lago Accord” has gained attention as a potential solution for 2025, similar to the 1985 Plaza Accord.  Its objective would be to weaken the U.S. dollar to enhance export competitiveness and reduce national debt. In exchange, allied countries would be required to purchase 100-year government bonds. Rujipan Assarut, Assistant Managing Director of KResearch, analyzed the impact of the trade war on the global automotive industry.  Increased competition, oversupply, and declining vehicle prices are expected. Japan, Germany, and South Korea are likely to diversify their markets and invest in U.S. production to mitigate tariff effects. Kevalin Wangpichayasuk, Deputy Managing Director of KResearch, warned that Trump’s tariffs could lead to a 1% contraction in Thai industrial production in 2025.  With reduced reliance on tourism, sectors such as electronics, home appliances, automotive, steel, and aluminum will be most affected. The impact of these policies is also evident in employment. In early 2025, factory closures have risen, particularly in electronics and automotive industries.  These closures primarily affect medium and large businesses with registered capital exceeding 100 million baht.  Additionally, manufacturing working hours have declined by 11% compared to the standard of over 40 hours per week, while total factory closures since 2021 have surpassed 5,000. In the tourism sector, its contribution to growth is expected to decline due to decreasing visitor numbers from China and Malaysia, as well as increasing competition. Changing travel trends make it difficult for Thailand’s tourism market to return to pre-pandemic levels. Shifts in traveler preferences, including a growing demand for sustainable tourism and off-the-beaten-path destinations, challenge traditional hotspots to adapt. Additionally, fluctuating global economic conditions and stricter travel regulations have further slowed recovery. To regain momentum, Thailand may need to diversify its offerings, promote lesser-known regions, and invest in eco- friendly initiatives that align with evolving traveler expectations. ### Related**Posts** ### 󠀁[PwC: Supply-Chain Diversification, AI and Energy Transition Open New Growth Paths for Thailand](https://www.thailand-business-news.com/economics/333076-pwc-supply-chain-diversification-ai-and-energy-transition-open-new-growth-paths-for-thailand)󠁿 ### 󠀁[Time to Rewrite Energy Rules: Unavoidable Transition for Thailand](https://www.thailand-business-news.com/environment/329524-time-to-rewrite-energy-rules-unavoidable-transition-for-thailand)󠁿 ### 󠀁[World Bank raises Thailand’s 2026 growth outlook to 2% but warns AI dependence and climate risks remain](https://www.thailand-business-news.com/economics/332820-world-bank-raises-thailands-2026-growth-outlook-to-2-but-warns-ai-dependence-and-climate-risks-remain)󠁿 ### 󠀁[The Changing Map of Growth: Why East Asia and the RCEP Are More Important Than Ever](https://www.thailand-business-news.com/opinion/328474-the-changing-map-of-growth-why-east-asia-and-the-rcep-are-more-important-than-ever)󠁿 For the second half of 2025, limited economic growth is anticipated on a quarter- to-quarter basis due to the trade war, last year’s high comparison base, and reduced economic momentum. Additionally, tighter monetary policies and lingering supply chain disruptions are expected to further weigh on economic activity. Businesses may face challenges in maintaining profit margins, while consumer spending could remain subdued amidst rising inflationary pressures.