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Thailand Aims to Dodge US Tariff Impact

Thailand Aims to Dodge US Tariff Impact

Citi Thailand anticipates that increases in US tariffs will have a minimal impact on Thai exports, as the country is not a primary target of American trade policies.

Nalin Chutchotitham, an economist at Citibank Thailand, noted that while Thailand may face indirect effects from US tariffs imposed during the Donald Trump administration, the overall impact on exports is expected to be limited.

“The US tariff policy is unlikely to significantly affect Thailand’s exports, as the country is not a strategic focus for US tariff hikes,” she stated. “However, we should keep an eye on potential US tariff increases on China, as the trade connections between Thailand and China mean that US tariffs on China could indirectly impact Thailand’s exports.”

Additionally, US policies are predicted to increase global economic uncertainties, which could hinder trade and reduce import demand from Thailand’s trading partners. Citi forecasts that Thai exports in US dollar terms will grow at a slower rate of 2.8% in 2025, down from 4.6% in 2024.

On a positive note, the bank expects Thai GDP growth to improve, projecting a rise to 3.2% in 2025, up from 2.7% in 2024, supported by domestic investment.

Private investment is expected to gain momentum, fueled by projects approved by the Board of Investment, particularly in sectors such as electric vehicles, data centers, and food processing industries.

Ms. Nalin emphasized that tourism will continue to be a major driver of Thailand’s economic growth this year. Citi anticipates 39.8 million foreign tourist arrivals in 2025, with average spending per visitor slightly increasing to US$1,298. Tourism-related income is expected to contribute 9.3% to GDP.

Citi also predicts that the Bank of Thailand will maintain its policy rate at 2.25% for the remainder of this year. However, if economic growth and inflation fall short of the central bank’s expectations, a single 25 basis point rate cut may be considered in the first half of the year.

Johanna Chua, head of emerging market economics and chief Asia economist at Citigroup, mentioned that the bank anticipates the US will raise tariffs on China to an average of 15%, which is significantly lower than the market’s expectation of 60%, due to ongoing negotiations.

“The tariff serves as a negotiating tool for the US with strategically targeted countries,” Ms. Chua explained.

Citi predicts that economic growth in Asia will slow to 4.3% this year, down from 4.8% in 2024, largely due to China’s economic decline. Growth in China is projected to decrease to 4.2% in 2025, down from 5% the previous year.

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