# Bangkok Bank Alerts: Political Unrest Set to Hinder Investments and Impact Thailand’s Economy in 2025

- Link: https://www.thailand-business-news.com/economics/231926-bangkok-bank-alerts-political-unrest-set-to-hinder-investments-and-impact-thailands-economy-in-2025
- Published: 2025-07-05T10:39:15+07:00
- Author: J. Allan

Bangkok Bank (BBL) expects continued political instability in Thailand to delay 
key investment decisions, further compounding the negative impact of U.S. tariffs
on Thai exports. 

## Key takeaways

 * Bangkok Bank has downgraded Thailand’s 2025 GDP growth forecast to 2% amid political
   instability and expected U.S. tariffs.
 * Investment decisions are being delayed as businesses await clarity on both domestic
   politics and U.S., Thailand trade negotiations.
 * Exports and tourism face mounting pressure, while interest rate cuts and a stronger
   baht are expected to help offset some economic strain.

The combination of domestic uncertainty and external trade pressures is creating
a challenging environment for economic growth.

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The bank believes that both public and private sector investments are likely to 
be postponed amid ongoing political turbulence.

At the same time, businesses are hesitant to move forward with new projects as they
await greater clarity on U.S. tariff policies and the outcome of trade negotiations
between Thailand and the United States.

Given these headwinds, BBL has revised its GDP growth forecast for Thailand in 2025
from 3% to 2%. This projection assumes that the U.S. will implement reciprocal tariffs
of 10% to 15% on Thai exports. 

In a more pessimistic scenario, if external risks intensify, GDP growth could slow
further to 1.5%, primarily due to the impact of trade restrictions.

While Thai exports showed resilience in the first half of the year, this performance
was largely driven by front-loaded orders from importers concerned about future 
tariffs. 

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The outlook for the remainder of the year remains uncertain, as U.S. buyers may 
scale back purchases after stockpiling earlier in the year. Additionally, increased
trade tensions and potential tariff escalations could place further pressure on 
the export sector.

There are also concerns about intensified competition if Chinese products are redirected
to alternative markets, potentially crowding out Thai goods in those regions.

Tourism, another pillar of Thailand’s economy, is also facing challenges. International
arrivals fell by 2–3% year-on-year during the first five months of 2025, with the
number of Chinese visitors particularly affected. BBL projects total international
arrivals to reach around 35.5 million this year. 

The decline in tourists has been linked to safety concerns and the recent earthquake
in Bangkok, with recovery expected to take several months.

In response to these developments, BBL anticipates that the Bank of Thailand will
cut interest rates twice this year, reducing the policy rate from 1.75% to 1.25%
in an effort to support economic activity. 

Additionally, the Thai baht is expected to strengthen against the U.S. dollar by
year-end, reflecting a broader weakening of the dollar in global markets.