Thailand's Economy Hit by Quake Losses and US Tariff Threats

Thailand's economic outlook for 2025 faces significant headwinds, with the recent earthquake expected to cause substantial financial losses and potential US tariff hikes threatening to dampen GDP growth, according to economists at a Fitch Ratings seminar on Tuesday.

Yunyong Thaicharoen, senior executive vice president at Siam Commercial Bank, presented his "Thailand's 2025 Economic Outlook," forecasting a 2.4% GDP growth amidst rising global uncertainties. 

He highlighted the looming threat of US tariffs, scheduled for announcement on April 2nd, targeting countries with trade surpluses with the US, including Thailand.

With a 45 billion baht trade surplus, Thailand could see its GDP reduced by 1% if the US imposes a 10% tariff, though the final rate and subsequent negotiations will determine the actual impact.
 

The recent earthquake is projected to inflict an economic loss of approximately 30 billion baht, primarily due to cancellations in hotel bookings and flights as tourists express concerns over safety. April's tourist numbers are expected to fall by 400,000, impacting the annual forecast of 38.2 million visitors.

Furthermore, the earthquake has led to a 1% decrease in condominium and high-rise building transfers in the Bangkok metropolitan area, preventing a reduction in the existing stock of around 7,400 units.

"It will take approximately three to four months to restore confidence among tourists and in high-rise building transfers," Yanyong stated, adding that effective government measures could expedite recovery.
 

Yanyong also noted that the global economy is projected to grow by 2.6% in 2025, close to the long-term average of 3%. However, Thailand's economic recovery from the COVID-19 pandemic ranks 162nd out of 189 countries, indicating a significant lag.

He stressed the need for economic stimulus to bridge the gap between Thailand's actual and potential GDP growth, which would also help alleviate debt burdens in both the business and household sectors.

Regarding monetary policy, the Bank of Thailand is expected to implement two more interest rate cuts, bringing the rate down to 1.5% from the current 2%.