Economy Tourism, Exports Falter as Bangkok Bank Sounds Alarm on Economic Outlook

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Picture courtesy of Bangkok Bank

 

Ongoing political turbulence in Thailand is putting a dampener on fresh investment, warns Bangkok Bank (BBL), potentially exacerbating the effects of US tariffs on exports.

 

Kobsak Pootrakool, a senior executive at BBL, explained that the uncertainty plaguing Thailand’s political scene could deter investment in both public and private sectors. Businesses are hesitant to make investment plans until there's clarity on US-Thai trade relations and potential tariff impacts.

 

"Thai political developments are notoriously unpredictable," Mr Kobsak stated. "The bank is keeping a close watch on these issues and assessing their implications for the economy. Furthermore, external challenges, particularly US trade policies, are threatening Thai economic growth, especially with ongoing structural problems."

 

BBL has responded by reducing its 2025 Thai GDP growth forecast from 3% to 2%, assuming the US will impose tariffs of 10-15% on Thai exports. If risks worsen, growth could plummet to 1.5%, largely due to tariff impacts.

 

While Thai exports were strong earlier this year, bolstered by preemptive buying before tariff hikes, the outlook remains uncertain. Export challenges may increase in the year's second half as US importers possibly reduce orders, and trade tensions continue, writes the Bangkok Post.

 

Mr Kobsak warned that if Chinese goods are redirected in trade deals, Thai products could face heightened competition in new markets. The tourism sector also struggles, facing declining arrivals from China due to security fears and the recent Bangkok earthquake.

 

International tourist arrivals dipped by 2-3% in the first five months of 2025, with expectations of 35.5 million visitors this year. This drop is linked to safety concerns and the quake. Recovery typically takes four to five months.

 

However, should the government unveil initiatives to attract tourists, the sector could bounce back by year’s end, Mr Kobsak added.

 

In monetary matters, Mr Kobsak anticipates two policy rate cuts from the Bank of Thailand this year, reducing it from 1.75% to 1.25% to support the economy amidst uncertainties. Furthermore, the baht is expected to strengthen against the US dollar by year-end due to a weakening US currency.

 

  Adapted by ASEAN Now from Bangkok Post 2025-07-01

 

 

[ikke1959]

Protectionism and arrogance  have never been good for the economy... So some things need to change very quickly. New rules and laws will help and also welcoming investors instead of hold them on a distance with the ridiculous 51/49% law

[blaze master]

The quake............. I just giggled.

[englishoak]

Weaken the Baht is the simple answer... but that isnt the policy of TPTB they will be just fine with all their offshore and foreign investments and shopping trips. 

[JimHuaHin]

As long as the super rich continue to get rich the system will not change.   A few technological changes and innovations here are there maybe, but otherwise the olde corruption and patronage systems will stay in place to the benefit of the 0.1% and the detriment of the country and most Thai citizens.

 

Why are the "big" boys and girls pushing AI?  Less need for workers!!!