Thailand's GDP Growth Forecast Upgraded to 2.2% on US Tariff Assumption

Strategic Insights -

Thailand's Fiscal Policy Office (FPO) has upgraded its economic growth forecast for this year to 2.2%, citing the assumption that US reciprocal tariffs will remain at lenient rates. This upgrade aligns with the International Monetary Fund's (IMF) global economic outlook, which projected global growth of 3% this year. The FPO's forecast is based on the assumption that among Thailand's 15 key trading partners, countries that have not reached an agreement with the US before July 29 will be able to negotiate and reach a deal by the third quarter. The value of Thai exports in US dollar terms is expected to grow by 5.5% this year, driven by a surge in import demand from trading partners.

Key Takeaways:

  • The FPO's GDP growth forecast for this year has been upgraded to 2.2% from 2.1% in April.
  • The upgrade is based on the assumption that US reciprocal tariffs will remain at lenient rates, similar to those applied to other countries in the region.
  • The FPO's forecast aligns with the IMF's global economic outlook, which projected global growth of 3% this year.
  • Thailand's economic growth forecast has been upgraded by the IMF to 2% from 1.8%.
  • The value of Thai exports in US dollar terms is expected to grow by 5.5% this year, driven by a surge in import demand from trading partners.
  • Manufacturing production is expected to grow by 1.2% this year, driven by a recovery in automobile manufacturing and the production of electronic components and circuit boards.
  • Domestic private consumption is forecast to grow by 3.1%, driven by strong purchasing power reflected through VAT collection.
  • The forecast is based on five key assumptions, including economies of Thailand's key trading partners growing by 2.8%, and an exchange rate average of 33.1 baht per US dollar.

Statistics:

  • Thailand's GDP growth forecast has been upgraded to 2.2% from 2.1% in April.
  • The value of Thai exports in US dollar terms is expected to grow by 5.5% this year.
  • Manufacturing production is expected to grow by 1.2% this year.
  • Domestic private consumption is forecast to grow by 3.1% this year.
  • Exchange rate average is expected to be 33.1 baht per US dollar, a gain of 6.2% from last year.
  • Foreign tourist arrivals are expected to reach 34.5 million this year, down from the previous estimate of 36.5 million.

Sources:

  • Pornchai Thiraveja, director-general of the Fiscal Policy Office (FPO), citing the IMF's global economic outlook.
  • International Monetary Fund (IMF), July 29.
  • Kasikorn Research Center (K-Research), maintained its GDP growth forecast at 1.4%.
  • Nuttaporn Triratanasirikul, deputy managing director of K-Research, citing steep US tariffs and sluggish tourism as main factors.
  • Finance Minister Pichai Chunhavajira, stating Thailand's proposal to the US is final, following several rounds of detailed revisions.