Thai Business Leaders Slash GDP Forecast Amid Political Turmoil
Thailand's leading business organisations have cut their economic growth forecast for 2025 to a maximum of 2.2%, citing political instability that is undermining private sector investment confidence
- Thai business leaders have significantly cut the country's 2025 GDP growth forecast to 1.8-2.2%, down from a previous projection of 2.4-2.9%, citing an economic slowdown.
- The forecast downgrade is attributed to a combination of political uncertainty, global economic volatility, an overly strong Thai baht, and structural domestic issues.
- In response, the business committee has proposed a "Reinvent Thailand" platform to implement urgent measures, including tax relief, skills-based wage policies, and a focus on resolving household debt.
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) warned on Wednesday that Thailand's economy is entering a slowdown phase, with growth in the second half of the year expected to reach only around 1%.
The committee now projects GDP growth of 1.8-2.2% for 2025, a significant reduction from earlier forecasts. In March-April, the projection ranged from 2.4-2.9%, which has been steadily revised downward through the year.
Thailand's economic performance has already begun to weaken, with second-quarter growth slowing to 2.8% from 3.2% in the first quarter.
The unemployment rate rose to 2.07% in Q2 from 1.88% in Q1, whilst the number of underemployed reached 2.1 million people, up approximately 5% year-on-year.
Key sectors including tourism, construction, property, and agriculture are experiencing slowdowns.
Small and medium enterprises (SMEs) are particularly vulnerable, evidenced by increasing non-performing loans over 90 days, especially among smaller SMEs with outstanding credit not exceeding 100 million baht.
Payong Srivanich, chairman of the Thai Bankers' Association and meeting chair, joined Federation of Thai Industries chairman Kriengkrai Thiennukul and Thai Chamber of Commerce chairman Dr Poj Aramwattananont in expressing concerns about the economic outlook.
Beyond political uncertainty, the JSCCIB highlighted several risk factors pressuring the economy:
Global economic volatility stemming from uncertain US trade policies, with decisions pending from the Supreme Court following a lower court ruling that tariff increases on various countries violated federal law
Currency strength misalignment, with the Thai baht continuing to appreciate despite economic fundamentals suggesting otherwise
Structural domestic problems requiring urgent attention
The committee expressed particular concern about the baht's strength, which appears linked to rising gold prices rather than economic fundamentals.
They noted a lack of comprehensive data to understand the impact of gold and cryptocurrency transactions, as well as undocumented remittances from foreign workers contributing to unclear balance of payments surpluses.
In response to these challenges, the JSCCIB has collaborated with key government agencies including the Bank of Thailand, the National Economic and Social Development Council, and the Fiscal Policy Office to develop "Reinvent Thailand – A Platform for Sustainable Policy Execution".
This platform aims to create sustainable policy implementation mechanisms and will be published on all participating organisations' websites, inviting input from all sectors for economic restructuring recommendations.
The business committee has proposed several urgent measures:
- Tax Relief: Reduce land and building taxes by at least 50% in 2026 or until economic recovery, to alleviate cost burdens and stimulate grassroots economic circulation.
- Skills-Based Wages: Prioritise skill-based compensation over minimum wage increases, emphasising upskilling, reskilling, and multi-skilling programmes to enhance labour productivity and competitiveness.
Strategic Focus Areas
The platform will initially focus on two urgent policy areas:
Household Debt Resolution: Systematic integration and data connectivity to increase access to formal credit systems and reduce reliance on informal lending
Private Sector Capability Enhancement: Supply chain integration with emphasis on technology investment, skills development, and internationally competitive environmental standards, supported by government procurement as market creation
The initiative represents what organisers call a "new thinking approach" requiring cooperation from all sectors, designed to serve as a "compass" for any government in formulating economic policies that enhance business competitiveness, create employment, increase income, and measurably improve living standards for all Thais.
The Reinvent Thailand platform is positioned as the beginning of a serious transformation process, with plans to expand cooperation to other relevant agencies in the future.
