Bangkok: The Federation of Thai Industries (FTI) indicates that the Thai economy is slowing down, maintaining GDP growth in 2025 at 1.8-2.2%, as political pressure on the economy increases.
According to Thai News Agency, the FTI has maintained its 2025 GDP growth forecast at 1.8-2.2%, citing increasing political pressures that are pushing the economy into a slowdown. Concerns about the continued baht appreciation are mounting, and the FTI is proposing that the government reduce or relax land and building taxes by at least 50% in 2026 or until the economy recovers. The FTI is also launching the Reinvent Thailand platform for all parties to propose joint economic restructuring strategies, focusing on solving household debt and enhancing private sector capabilities. These proposals will be compiled and submitted to the new government.
Mr. Payong Srivanich, Chairman of the Thai Bankers’ Association, chaired a meeting of the Joint Standing Committee on Commerce, Industry, and Banking (JSCCIB), along with Mr. Kriangkrai Thiennukul, Chairman of the FTI, and Dr. Poj Aramwattananon, Chairman of the Thai Chamber of Commerce. He stated that the global economy remains turbulent due to US trade policies, pending the Supreme Court’s ruling following the US Court of Appeals’ ruling that import tariffs on various countries were unlawful. Furthermore, the US ended tariff exemptions for imports valued at less than US$800 late last month, leaving global economic forecasts for this year highly uncertain.
The Thai economy is beginning to slow down. The second quarter saw 2.8% growth, down from 3.2% in the first quarter. The formal unemployment rate rose to 2.07% in the second quarter from 1.88% in the first quarter, and the number of virtually unemployed stood at 2.1 million, up approximately 5% from the previous year. The tourism, construction, real estate, and agricultural sectors also slowed. The vulnerability of SMEs is evident in the increasing number of loans overdue for more than 90 days, particularly small SMEs with outstanding loans of no more than 100 million baht.
In 2025, Thailand’s GDP is expected to grow by 1.8%-2.2%, with the economy projected to grow by only around 1% in the second half of the year. Economic pressures are heightened by political uncertainty, which could impact budget disbursements, as well as a lack of confidence in private sector investment decisions in the future, and the risk of the country’s credit rating being downgraded.
The FTI is concerned about the continued appreciation of the baht, which is inconsistent with the slowing economic fundamentals. Instead, it is linked to the steadily rising gold price. Currently, there is a lack of in-depth data to understand the impact of gold and cryptocurrency transactions, including remittances by migrant workers that do not go through formal channels. This has resulted in more than half of the balance of payments surplus being unclearly classified (errors and omissions). Relevant agencies should prioritize separating and analyzing the impact of gold transactions on the real sector, as well as improving and addressing structural issues to achieve greater balance. For example, consider foreign investment mechanisms through the Sovereign Wealth Fund.
The FTI believes that the recovery of the Thai economy continues to face challenges from both external factors, such as the global economic situation and the trade war, and internal factors such as rising energy costs, minimum wages, and raw material prices, impacting entrepreneurs, particularly vulnerable SMEs. Therefore, it is proposing that the government consider reducing or easing land and building taxes by at least 50% by 2026 or until the economy recovers. This will alleviate costs, enhance liquidity, mitigate the risk of business closures, and stimulate grassroots economic growth. Such measures will mitigate negative impacts, restore confidence, and strengthen the Thai economy as a whole.
The FTI believes that the government should prioritize the pay-by-skills system, as announced by the Skill Development Promotion Committee, over minimum wage increases. It should also prioritize up-skilling and re-skilling, multi-skilling, and new skills to create a skilled workforce aligned with labor market demands and increase labor productivity. This can reduce costs and enhance competitiveness.
Following discussions with the Bank of Thailand (BOT), the National Economic and Social Development Council (NESDC), and the Fiscal Policy Office (FPO) in early July 2025, the FTI recognized the impact of US trade policy on exacerbating domestic structural problems. These include existing vulnerabilities such as inequality, household debt, and a large informal economy; lack of competitiveness in the new world, lack of investment in productivity development, and a lack of necessary skills in the workforce; and government challenges stemming from the dynamics of rapid and severe global change and the incoherence and disconnection of government policies, which have long been factors that have hindered Thailand’s growth potential. Therefore, a common view was reached to develop a framework for restoring confidence and driving the Thai economy forward.
This collaboration has led to the development of the Reinvent Thailand – A Platform for Sustainable Policy Execution platform, a collaborative platform for building a sustainable future for Thailand for all. It focuses on implementing practical policies and creating new dynamics for long-term economic growth. Reinvent Thailand will be published on the websites of all partner organizations, providing a platform for all sectors to participate in proposing guidelines and building coalitions to restructure the country’s economy. The private sector will play a key role in driving this forward, relying on government support to create an enabling environment and encourage accelerated adaptation and prioritization. This platform is not simply a request for government assistance; all parties must share responsibility for implementation. This platform creates a participatory space for policy design, policy screening, implementation, and continuous monitoring and evaluation (result-oriented). This platform emphasizes th
e use of data (data-driven) to address issues effectively, efficiently, and sustainably, restoring competitiveness.
Reinvent Thailand marks the beginning of a serious change process. It will begin coordinating and pushing forward two urgent policies that can produce real results: solving household debt problems by integrating the entire system, linking data, leading to increased access to formal credit and reducing reliance on informal debt; and enhancing the capacity of the private sector, linking the entire supply chain, emphasizing investment in technology, upgrading labor skills and production by Thais, and creating environmental standards that are competitive at the international level. This will be supported by government incentives, such as government procurement, to create markets.
These two policies are just examples of policy approaches reflecting a new way of thinking that requires cooperation from all sectors. This cooperation will be expanded to other relevant agencies in the future. The guidelines laid out under this platform prioritize policy effectiveness and continuity. They can serve as a compass for all governments in formulating economic policies to enhance business competitiveness, increase skills, create employment, generate income, and elevate the quality of life of all Thai people in a tangible and measurable manner.