ALTHOUGH Thai gross domestic product (GDP) may dip in the third quarter of this year compared to the previous quarter the new government’s economic policy continuity will help mitigate the risk of recession with growth expected to recover slightly in the final quarter, according to a projection by Krungsri Research which PPTVHD 36 published today (Sep. 23).
The new government led by Prime Minister Anutin Charnvirakul, leader of Bhumjaithai Party, is preparing to deliver a policy statement to Parliament by end of this month or early next next month with this marking its first official day, while the administration has a timeframe of just four months.
Before dissolution of Parliament and the subsequent general election, this government is being closely monitored to determine its capacity to ensure policy consistency and drive economic growth.
Steps being taken to mitigate the risk of recession
Krungsri Research says the clearer political situation, coupled with the new government’s continued implementation of economic policies would be a key factor helping Thai economy avoid a technical recession. Although GDP is expected to contract in Q3 (compared to the previous quarter, or %QoQ), it may expand slightly in Q4 with this meeting the baseline projection of 2.1% GDP growth for the full year.
However there are economic constraints with GDP growth in the second half of this year expected to be only 1.3% year-on-year, slowing from 3.0% year-on-year in the first half.
This is due to the expected decline in export acceleration prior to US import tariffs being fixed at 19% for Thailand starting August with the higher tariff further pressuring the export sector.
These factors remain challenges for economic growth going forward, although continued government policy will mitigate the risk of recession to some extent.
The Thai tourism sector rocked by stronger competition
As the Thai tourism sector is facing intensified competition, recovery remains challenging for the rest of the year. In August, the total number of foreign tourists visiting Thailand fell to 2.58 million, a decrease of 12.8% YoY, generating 119 billion baht in tourism revenue, a decrease of 13.4%. For the first eight months of the year, total foreign tourist arrivals reached 21.9 million, a decrease of 7.2% YoY, generating 1.01 trillion baht in revenue.
Thai tourism continues to recover weakly
Krungsri Research believes that Thailand’s tourism recovery remains weak, with significant pressure from the continued contraction of the Chinese tourist market. In August, only 0.4 million Chinese tourists visited the country, a decrease of 37.7% YoY, and in the first eight months of this year, only 3.1 million came, a decrease of 35.3% YoY, representing only approximately 40% of pre-pandemic levels in 2019. These factors reflect safety concerns and changing travel behaviour among Chinese tourists, who are increasingly choosing alternative destinations, not only Japan but also within Asean.
Vietnam, in particular, attracted 3.5 million Chinese tourists in the first eight months of this year, significantly higher than Thailand. Malaysia is also becoming popular.
This situation reflects Thailand’s loss of competitiveness in the Chinese market, which used to be a key one for Thai tourism. It also reinforces the fact that recovery prospects for the tourism sector in the remainder of 2025 remain highly challenging. Without proactive measures to address issues dragging down the sector, particularly regarding safety, the role of tourism, once a key driver of the Thai economy, could diminish in the coming period.
CAPTIONS:
Top: Prime Minister Anutin Charnvirakul, right, attending an event. Photo – PPTVHD 36
Front Page: A representative image of the Thai economy. Photo – Thai Rath
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