Thailand’s economy is projected to grow this year beyond the earlier estimate of 2.2%, buoyed by the positive effects of the US reciprocal tariff, which has given the country a competitive edge over rivals.
Speaking after delivering the keynote speech at “Thailand Focus 2025,” organized by the Stock Exchange of Thailand, Deputy Finance Minister Paopoom Rojanasakul stated that the Fiscal Policy Office initially forecast a 2.2% GDP growth for 2025 on July 30. However, this figure may be revised upward in the next forecast, as recent economic indicators have been more favorable than anticipated.
On August 18, the National Economic and Social Development Council revised its forecast, projecting a 2% growth rate for 2025, up from an earlier estimate of 1.8%.
Mr. Paopoom explained that before the announcement of Thailand’s reciprocal tariff rate of 19%, several economic research institutions had cut their forecasts for Thai GDP growth by approximately one percentage point. However, the final US tariff rate for Thailand has had a positive impact.
He added, “Compared to our regional rivals, our tariff rate isn’t that high; in fact, it’s slightly better. Additionally, Thailand’s high level of domestic production and regional value content requirements mean we can qualify for lower tariff rates at a higher proportion than our competitors, giving Thai exporters a pricing advantage.”
These factors, along with improving economic indicators, have alleviated earlier concerns. The decision by the Bank of Thailand to cut its policy rate has also provided additional support.
Exports have remained robust throughout the year, though a slight slowdown is expected in the latter half. Mr. Paopoom noted, “GDP growth in the first half averaged around 3%. While growth in the second half is expected to be below that, the full-year GDP will surpass the 2.2% forecast.”
Regarding fiscal stimulus measures, he said the government has implemented a large-scale package worth 157 billion baht, with 130 billion already disbursed. This stimulus is expected to positively impact the economy during the final quarter of 2025 and the first quarter of 2026.
On fiscal space, Mr. Paopoom highlighted that Thailand’s public debt-to-GDP ratio has decreased to 64%, marking its first decline in ten months. This indicates that debt is growing at a slower pace than GDP, which is a positive sign.
He also noted that the government’s interest burden-to-revenue ratio stands at 9%, below the 10% safety threshold. Although this ratio may rise as debt servicing costs increase, it remains manageable as long as economic growth continues to enhance government revenues.
Mr. Paopoom emphasized that credit rating agencies consider multiple factors beyond debt service ratios, including debt repayment capacity, growth potential, infrastructure investments, fiscal and monetary policy space, and government stimulus measures.
Concerning foreign direct investment (FDI), he stated that despite record-high FDI figures this year according to the Board of Investment, the government must continue promoting a friendly business environment and enhance both tax and non-tax incentives. An example is the draft Financial Hub Act, which aims to attract more foreign capital and is expected to be introduced to Parliament within the next 1-2 weeks.
Lastly, on monetary policy, he indicated that the Monetary Policy Committee still has room to lower interest rates if deemed appropriate.