Thailand’s economy rose by 3.1% year-on-year in the first quarter of 2025, surpassing the 2.9% forecast in a Bloomberg survey. This growth is attributed to businesses accelerating orders to mitigate the potential impact of a 36% US tariffs.

On a quarterly basis, the economy grew by 0.7%, exceeding the predicted 0.5% increase. However, the National Economic and Social Development Council (NESDC) revised its full-year growth forecast downward to 1.3%-2.3%, from a previous projection of 2.3%-3.3%.

The outlook for Thailand remains challenging due to potential higher US tariffs, which could impact the export-driven economy. Local consumption has shown limited recovery, and the economic slowdown in China continues to affect tourism.

Fiscal and monetary policy options appear constrained, as the Bank of Thailand has already reduced its policy rate to 1.75%. The Thai government has pledged new stimulus measures to address potential economic strain, although rising public debt remains a concern.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Thailand’s economic resilience in historical perspective

The current 3.1% growth rate represents a modest performance when viewed through Thailand’s remarkable economic history.

From 1985-1994, Thailand was the world’s fastest-growing economy with GDP per capita increasing at 8.2% annually, including extraordinary growth of 13.2% in 1988 and 12.2% in 1990 1.

This period marked Thailand’s crucial transition from an agrarian economy to a newly industrialized economy (NIE), with electronics becoming a major export sector, a foundation that continues to support its economic resilience today 1.

The recent GDP growth of 3.1%, while positive and better than expected, demonstrates how Thailand’s growth trajectory has moderated significantly from its historical peaks as the economy has matured and faced new global challenges.

Thailand’s GDP per capita has still shown consistent improvement, rising 3.74% in 2023 to reach US$7,172, reflecting ongoing but more measured economic development 2.

2️⃣ Thailand’s fiscal balancing act amid tariff threats

Thailand is navigating a careful balance between stimulating its economy and maintaining fiscal stability as it faces potential US tariffs.

The government is considering an emergency loan decree with a stimulus package of at least 500 billion baht to counter economic challenges, drawing on its experience with seven emergency loan decrees totaling 3.83 trillion baht issued between 1998 and 2021 3.

Currently, Thailand’s public debt stands at 12.1 trillion baht (64.21% of GDP), approaching but still under its 70% ceiling, providing some fiscal space for response measures 4.