Bangkok: SCB EIC expects GDP growth to be less than 1% in the second half of 2025, even with the “Half and Half” scheme included. SCB EIC estimates GDP growth in 2025 at 1.8%, with growth in the second half of the year less than 1%, even with the “Half-Half” scheme included. The report points to the baht’s appreciation, suggesting a near-record of the 1997 Tom Yum Kung crisis, SMEs are vulnerable, and the unemployment rate among recent graduates has increased by 17-18%. The government is proposing measures to restore confidence, stimulate the economy, and restructure the economy, following Thailand’s credit rating decline. The Monetary Policy Committee (MPC) is expected to cut interest rates once more this year.
According to Thai News Agency, Dr. Yanyong Thaicharoen, Chief Executive Officer, Economic and Sustainability Research, Siam Commercial Bank Economic Intelligence Center (SCB EIC), assessed the Thai economic outlook for the third quarter, predicting that the Thai economy will grow by only 1.8% in 2025 and slow to 1.5% in 2026. This is considered low compared to historical averages. Growth in the second half of this year may average less than 1%, and there is also a risk of a technical recession. The main factor is weak exports following the acceleration of exports to the United States ahead of tariff increases. The latest figures for August 2025 show exports starting to decline, with this trend likely to continue into early next year.
Another exacerbating factor is the significant appreciation of the baht. From the beginning of the year until September, it appreciated by nearly 8% against the dollar, the highest in four years. Compared to trading partners’ currencies, the baht’s strongest point is close to the 1997 Tom Yum Kung crisis. Compared to the Vietnamese dong, which has weakened by 3%, Thailand is at a competitive disadvantage of approximately 10-11%, impacting both exports and tourism. The baht is expected to trade within a range of 31.50-32.00 baht/dollar this month and 31-32 baht/dollar by the end of the year.
On the tourism front, although the negative foreign tourist numbers have improved from -16% in July to -10% in the first half of September, it is still considered a contraction. The domestic economy remains pressured by high household debt and the vulnerability of small and medium-sized enterprises (SMEs), whose revenue and profits have yet to recover to pre-COVID levels, while large businesses have already recovered significantly.
Dr. Yanyong pointed out that labor market issues are also concerning, with the unemployment rate in the social security system exceeding 2% and unemployment among new graduates reaching 17-18%, risking a greater shift of young people into the informal economy.
Regarding monetary policy, SCB EIC expects the Bank of Thailand (BOT) to cut interest rates once more in the fourth quarter of this year, to 1.25%, and again early next year to 1%. This will ease financial conditions and reduce debt burden and credit risk, should the economy slow more than expected or persistently negative inflation present further room for further reductions. At the same time, credit measures should be strengthened to assist SMEs with business restructuring, particularly in green investment and digital technology.
On the fiscal front, a major concern is Moody’s and Fitch downgrading Thailand’s credit outlook from “stable” to “negative,” citing low growth, a fragile fiscal position, and continued rise in public debt. Therefore, the new government should pursue three main missions: stabilize, stimulate, and structural reform.
Dr. Yanyong further commented on the “Half-Half” measure, stating that while it might stimulate spending and be implemented in a timely manner, its impact on GDP is limited. Similarly, household debt relief measures still need to be expedited, particularly low-interest loans to help SMEs adapt. Furthermore, it is crucial to accelerate government disbursements, as public spending and investment have been slowing recently. Therefore, the start of the new fiscal year in October is a crucial time to accelerate disbursements, whether from the regular budget or the newly allocated 150 billion baht. Expedited disbursements will help bolster economic momentum and drive forward more effectively.
Regarding the US announcement of a specific tariff of 100% import duty on branded or patented drugs, effective October 1st, it is estimated that the impact on Thai exports will be only 1-2% and may not be severe. However, it remains a warning sign that uncertainty in the international trade arena remains high, and Thai businesses need to continue to closely monitor their trading partners and competitors.
He also pointed out that confidence is key. The government should set clear goals, be proactive, and implement continuous communication, such as releasing a weekly economic dashboard, to build confidence in all sectors. While the economy will face significant challenges this year and next, if export and tourism issues can be addressed, there’s a good chance the Thai economy will recover from 2027 onwards.