As we look ahead to August 2025, Thailand's economic narrative remains a complex interplay of global pressures and domestic efforts to foster resilience. The nation continues to grapple with the lingering effects of international trade tensions and shifting consumer behaviors, while simultaneously pushing forward with strategic investments and policy adjustments aimed at long-term growth. The insights below are drawn from data and trends observed through July 2025.
Overall Economic Performance
The general outlook for Thailand's GDP growth in 2025 has seen some downward revisions from earlier in the year. While the Bank of Thailand (BOT) maintains a 2.3% projection, the World Bank has recently downgraded its forecast to 1.8%, a figure also echoed by TRIS Rating. This cautious stance is primarily driven by:
Lingering US Tariff Uncertainty: Despite temporary delays, the looming threat of higher US import tariffs, particularly beyond the August 1, 2025, deadline for reciprocal tariffs, remains a significant concern for Thailand's export-driven economy. Even if partial reductions are negotiated, Thai products could face higher rates than competitors, impacting competitiveness.
Weak Private Consumption and Investment: High household debt continues to constrain domestic demand. In Q1 2025, consumer loan growth contracted, and NPLs in the banking system increased to 2.90%, mainly driven by SMEs and mortgage loans. Uncertainty surrounding trade policies further dampens business and consumer confidence, leading to slower private sector investment.
Government Spending as a Key Driver: Public sector investment is anticipated to be a primary economic driver for the remainder of 2025. The Cabinet approved a 157 billion baht economic stimulus plan in May, derived from the 2025 fiscal year budget, focusing on infrastructure for water management, transportation, and tourism development. However, potential delays in the 2026 government budget, currently a draft, could pose further downside risks.
The Bank of Thailand has signaled its willingness to continue monetary easing to support the economy, with headline inflation remaining subdued at -0.25% in June, reflecting deflationary pressures.
Key Industry Insights
Let's examine the performance and outlook for some of Thailand's key industries:
Manufacturing
The Thai manufacturing sector showed improved performance in June, with the S&P Global Thailand Manufacturing PMI rising to 51.7, the strongest expansion since August 2024. This was driven by increased new orders, including export orders, and accelerated output growth. However, August's sentiment remains cautiously optimistic. While production capacity utilization is expected to improve, the sector faces ongoing challenges from intensified competition from imported goods and potential impacts from US tariffs, particularly in electronics, auto parts, machinery, and steel. Businesses are increasingly looking to adapt through cost-cutting and, for larger firms, relocating production.
Tourism
Thailand's tourism sector, a vital economic pillar, continues to see robust visitor numbers. As of July 20, 2025, Thailand welcomed over 18.3 million international tourists, generating approximately THB 850 billion in revenue. While there was a slight year-on-year decline of 5.91% in visitor numbers compared to the same period in 2024, the sector remains strong. Malaysia (2.54 million), China (2.53 million), India (1.31 million), Russia (1.09 million), and South Korea (0.85 million) continue to be the top source markets. Notably, arrivals from Japan surged by 70.26% in the week of July 14-20, pushing it into the top 5 weekly source markets.
The "Amazing Thailand Grand Tourism and Sports Year 2025" campaign is actively promoting the country, with ongoing efforts to diversify markets and attract high-value tourists. Despite projections for 37.5 million visitors and THB 1.78 trillion in revenue for the full year, the Ministry of Tourism and Sports acknowledges the ambitious target of 39 million, expecting to hit closer to 35 million. The focus for 2026 and beyond is shifting towards "quality tourism" with an emphasis on value, experience, and sustainability, aiming for THB 2.8 trillion in tourism revenue. Easing immigration processes and increased flight frequencies are also contributing to the positive outlook.
Exports
Thai exports in June saw a significant 15.5% year-on-year growth, primarily driven by front-loading of shipments to the US in anticipation of new tariffs. Exports to the US surged by 42%. Industrial shipments increased 17.6%, marking the 15th successive month of expansion. However, this accelerated pace is expected to temper in the second half of the year. The Economic Intelligence Centre (EIC) of Siam Commercial Bank (SCB) forecasts that even with a partial reduction in reciprocal tariffs, Thai exports will face increasing pressure from August onwards due to higher tariff rates compared to competitors. Overall, merchandise exports are predicted to see only marginal expansion for the full year, with significant downside risks if trade negotiations do not yield favorable outcomes. The EXIM Index, a leading indicator for Thai exports, dropped to a six-quarter low in Q2, signaling a slowdown in Q3 due to global trade tensions and sluggish manufacturing.
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Emerging Sectors and Investment Trends
Thailand is actively promoting several high-potential industries to drive future growth, with the Board of Investment (BOI) reporting a record 1.06 trillion baht (USD 32.5 billion) in investment promotion applications for the first half of 2025, a 139% increase year-on-year. This was driven by a 20-fold increase in digital sector investments, and continued growth in the E&E and rail sectors. Key focus areas include:
Digital Transformation: This remains a key government priority, with significant investments in data centers, semiconductors, robotics, and the broader electronics and electrical industry. The e-commerce and digital services sectors are booming.
Next-Generation Automotive: The focus on Electric Vehicles (EVs) continues, supported by government incentives. May 2025 saw BEV production surge by 641.16% year-on-year, and new BEV registrations in Thailand increased by 70.65% year-on-year, with total cumulative registered BEVs reaching 280,600 units (up 60.05% YoY).
Renewable Energy: Ambitious targets for solar, biomass, and wind power are driving investments in this sector. Under the draft Power Development Plan (PDP2024), clean energy is expected to account for 51% of electricity generation by 2037 and 74% by 2050. The BOI reported 191 applications for renewable energy projects in H1 2025, representing 42.24 billion baht in investment.
Health & Wellness: Thailand's established medical tourism industry, coupled with an aging population, creates strong demand for medical and beauty services, digital health solutions, and wellness retreats.
Future Food and Agri-tech: This sector continues to show promising growth and investment opportunities.
Logistics and Infrastructure: Given Thailand's strategic location, continued development in this area is expected, with government budget allocation supporting infrastructure projects.
Government Policy and Challenges
The Thai government is taking a proactive approach to economic management:
Monetary and Fiscal Support: The BOT's dovish stance on interest rates and the government's focus on accelerating budget disbursement for the 2025 fiscal year are intended to stimulate economic activity.
Trade Policy Negotiations: Intense efforts are underway to negotiate favorable trade terms, especially with the US, to mitigate tariff impacts. Banks are already warning of ripple effects across sectors from potential tariffs.
Structural Reforms: Addressing long-term challenges such as an aging society, skill mismatches in the workforce (particularly in the digital economy), and enhancing competitiveness through digital and green transitions remain crucial. The upcoming "The New Thailand" tourism strategy in 2026 reflects this long-term vision.
Conclusion
As we step into August 2025, Thailand's economy presents a dynamic picture. While recent export surges were largely driven by temporary factors, and domestic demand remains subdued by household debt, key sectors like tourism show continued strength. The government's strategic focus on digital transformation, renewable energy, and other high-value industries, coupled with strong investment promotion efforts, provides a crucial foundation for future growth. Businesses in Thailand must remain adaptable, focusing on diversification, innovation, and leveraging these new growth engines to navigate the evolving global economic landscape in the coming months.