Kasikorn expert warns Thai economy may slip into recession in Q4

Thailand’s economy could slide into recession in the last quarter of this year, as a huge drop in export volumes and uncertainties surrounding border tensions weigh heavily, Burin Adulwattana, chief economist of the Kasikorn Research Centre, said in an interview with Thai PBS World.

The export sector is likely to contract in second half of 2025 due to US tariff impacts.

“We might see recession in Q4 this year, because we’d expect to see negative 7.5% in the second half, despite growth in first. Coupled with border tensions, the economy has lost a key economic driver of tourism, as Chinese and other foreign tourists are not visiting Thailand like they once were,” he said.

The recent strength of Thai baht has also adversely affected the country’s export sector. Burin noted that, recently, the currency is among the strongest in the region, which puts additional pressure on Thai exports.

He added that Thai exporters are facing a double whammy, as US tariffs are already slowing growth and the strong baht will further weaken the competitiveness.

He said, however, that the Thai baht will depreciate in the near future, as the country’s competitiveness is declining, due to outdated export industries, the ageing population and a potentially stronger US dollar.

Burin Adulwattana, chief economist of the Kasikorn Research Centre, stressed clear policy direction for boosting Thailand's competitiveness.

While Thai government is aiming at incentivising growth to 3% this year, he warned that Thailand will likely not achieve this goal, unless structural problems are addressed swiftly, particularly in the inefficient agricultural sector and overly complex laws and regulations.

Amid ongoing economic challenges, one silver lining is that Thailand’s GDP growth is projected to be 1.5%, with a slight increase of 0.1% following the reduction in US tariffs to 19%, according to the research centre.

With the new tariff rate, the chief economist emphasised the importance of the leveraging the tailwind to maintain and strengthen existing supply chains within Thailand.

“As India is now facing higher tariffs than Thailand, established supply chains and production bases will remain in Thailand, such as the seafood and jewelry industries. In ASEAN, we will not face huge relocations, since tariff rates are similar for regional peers,” he noted.

He concluded on an optimistic note, stressing stable foreign direct investment and new data center projects bolstering economic growth. To unlock new economic momentum, he highlighted the need for rapid development of clean electricity.

To support millions of farmers and the agriculture industry in general, amid risks associated with opening the market to the U.S., he suggested implementing stimulus and subsidy packages rapidly, to help minimise the impact.

By Franc Han Shih, Thai PBS World