Fiscal Policy Office projects higher GDP growth as the economy ends the year with a resilient mixed bag

October 31, 2025

LATEST NEWS

Fiscal Policy Office projects higher GDP growth as the economy ends the year with a resilient mixed bag

Thailand’s economy may exceed expectations in 2025, with 2.4% GDP growth fueled by stronger exports, foreign tourism and the Half-Half Plus stimulus, showing resilience despite political turmoil, trade pressures and a challenging final quarter.

Within days of Finance Minister Ekniti Nitithanprapas warning of a struggle to meet GDP growth, the Fiscal Policy Office suggested the economy may exceed expectations, reporting 2.4% for 2025. This comes on the back of stronger-than-expected exports, a surge in foreign tourism, and the government’s Half-Half Plus stimulus. Full-year figures will only be confirmed in January, but historically, the last quarter often underperforms. Still, the economy is holding up despite political turmoil and trade pressures, showing resilience in a challenging year.

The Fiscal Policy Office projected Thailand’s GDP will grow 2.4% in 2025, up from earlier expectations. This follows a more pessimistic forecast by Finance Minister Ekniti Nitithanprapas just days ago in Bangkok. (Source: Siam Rath)

Bangkok is currently enveloped in uncertainty over the Thai economy as policymakers and businesses evaluate growth prospects. At the beginning of the week, Finance Minister Ekniti Nitithanprapas spoke at a seminar.

He highlighted structural issues that must be resolved before sustainable economic growth can be restored. Moreover, he emphasised that without addressing these long-standing structural challenges, policy measures alone cannot achieve lasting improvement.

The minister suggested that the government is striving to achieve roughly 2% GDP growth in 2025. However, within days, the Ministry of Finance Fiscal Policy Office revised the country’s growth forecast to 2.4%, up from the previous 2.2%.

Fiscal Policy Office revises Thailand’s 2025 GDP growth forecast to 2.4% on exports and Half-Half Plus

By comparison, Thailand’s economy grew 2.5% in 2024. This revision reflects higher-than-expected exports during the third quarter, combined with the government’s Half-Half Plus stimulus program. Therefore, analysts view the revised forecast as cautious optimism rather than a guarantee of sustained growth.

Winij Wisetsuvarnabhumi, Director-General of the Fiscal Policy Office (FPO), stated that the Half-Half Plus program has already generated ฿2.2 billion in spending. Furthermore, he explained that this contribution is expected to boost the economy in the fourth quarter, potentially adding over 1% to annual growth.

Private consumption is forecast to grow 3% in 2025, mainly driven by government stimulus measures such as this program. Similarly, merchandise exports in US dollars are expected to increase by 10%, led by high third-quarter exports to the United States and China. Equipment, computer components, and rubber products are especially significant in this growth.

In addition, government consumption is expected to expand by 0.8%, public investment by 5.6%, and private investment by 1.7%. Consequently, the FPO projects GDP growth in 2026 to slow to 2%, primarily due to potential export weaknesses. The Ministry of Finance warned that Thailand’s economic expansion is fragile, heavily reliant on both domestic stimulus measures and global market conditions.

UTCC and OIE warn that limited retailer participation and weak industrial production continue to constrain growth

Despite government optimism, the University of the Thai Chamber of Commerce (UTCC) cautioned this week that retailer participation in the Half-Half Plus program remains limited. Specifically, only basic outlets selling day-to-day goods and ingredients are participating.

Although this provides grassroots support for consumption, it is unlikely to significantly affect discretionary spending. Therefore, while the program injects money into the economy, its ability to drive broad-based growth is constrained.

The Office of Industrial Economics (OIE) reported that industrial production declined by 2.4% in the third quarter compared with last year. Furthermore, capacity utilisation was only 57%, indicating underused industrial capacity.

However, the Industrial Production Index (MPI) for September 2025 increased 1.02% to 94.56, driven by a 5.57% increase in automobile production. In particular, electric vehicle sales contributed meaningfully to this recovery. The OIE estimates that the Half-Half Plus program could boost industrial GDP by approximately ฿15 billion.

Domestic tourism and government incentives help cushion Thailand’s economy against slowing growth

Domestic tourism is also providing some relief to the economy. The Half-Half Plus travel program was launched to encourage domestic spending on goods and services, including food, beverages, general merchandise, wellness services, and public transportation.

Additionally, government initiatives such as electricity bill reductions and the You Fight, We Help Phase 2 program are expected to stimulate demand further. Therefore, these combined measures are providing short-term support to both household consumption and industrial output.

Nevertheless, significant pressures remain. OIE officials noted that US trade policy continues to weigh heavily on the industrial sector.

The United States imposed a 19% additional tariff on certain Thai products, and further tariffs on wood, pharmaceuticals, furniture, and large trucks are under review. Moreover, the strengthening baht, driven by capital inflows and declining US interest rates, has increased export costs, undermining the competitiveness of Thai products in global markets.

Export industries face declining revenue as international tourism and global trade remain weak

Industries reliant on domestic raw materials and with high export ratios, such as frozen foods, sausages, luggage, sports shoes, and alcoholic beverages, have been particularly affected. As a result, export revenues have declined, and international tourism has not fully compensated. Consequently, the overall MPI in the third quarter of 2025 stood at 93.36, a 2.4% contraction from the same period last year. Capacity utilisation also remained low at 57.39%.

In contrast, international conditions show some positive signs. ASEAN manufacturing is beginning to recover, and production in the region is improving slightly. However, the European Union’s manufacturing sector remains sluggish, limiting opportunities for Thailand’s export-oriented industries. Therefore, global trade dynamics remain a critical determinant of the country’s economic trajectory.

Thailand’s foreign tourism sector continues to face mixed outcomes. Arrivals are expected to reach 33.5 million in 2025, a 5.8% decrease from last year, generating ฿1.56 trillion in revenue. Average spending per visitor is projected at ฿46,560. In 2026, arrivals are expected to rise to 35.5 million, generating ฿1.68 trillion, with average spending increasing to ฿47,280 baht. Thus, while the tourism sector provides some economic support, it is not fully offsetting domestic weaknesses.

Public expenditures and Kon La Khrueng Plus program aim to stimulate domestic demand and support growth

Public expenditures remain a major tool for economic support. Total spending in 2025 is projected at ฿4.3 trillion, a 3.2% increase over the previous year. Government consumption will total ฿3.17 trillion, while public investment is expected at ฿1.13 trillion. In 2026, total expenditures are projected at ฿4.44 trillion, with government consumption rising to ฿3.27 trillion and public investment reaching ฿1.17 trillion. Accelerated disbursement measures are intended to stimulate domestic demand.

Prime Minister Anutin Charnvirakul has encouraged merchants to register for the Kon La Khrueng Plus program. Officials are conducting field surveys to facilitate registration and identity verification. Stores participating in the Half-Half Plus program are not required to submit sales data to the Revenue Department.

As of October 29, total spending under the program reached ฿1.9 billion. Blue Flag stores accounted for ฿709 million, food and beverage outlets ฿697 million, and general stores ฿474 million. Service shops, OTOP shops, and public transport contributed smaller amounts. The top spending destinations are Bangkok, Chonburi, Nakhon Ratchasima, Samut Prakan, Pathum Thani, Nonthaburi, Songkhla, Nakhon Si Thammarat, Chiang Mai, and Khon Kaen.

Thailand may also gain from expanded access to the US market under a finalised trade pact. Prime Minister Charnvirakul met with President Donald Trump, while American negotiators signalled flexibility for products with limited alternative suppliers.

US interest rate cut expected to weaken dollar and prompt Thai rate adjustments to boost growth

Additionally, the US Federal Reserve’s 25-basis-point interest rate cut is expected to weaken the dollar, diminishing further Thai export competitiveness. Consequently, a Thai interest rate cut is anticipated soon to stimulate domestic growth further.

Despite these measures, headline inflation is expected to remain at -0.2% in 2025, while the current account surplus is projected at $15.5 billion. In 2026, inflation is forecast to rise to 0.5%, while GDP growth slows to 2%, largely due to potential export contraction of -1.5%. Businesses accelerated exports in 2025 to mitigate anticipated US tariff hikes, which may leave limited room for growth in 2026.

Overall, Thailand’s economy remains fragile. Government stimulus, export expansion, and foreign tourism provide temporary support. However, structural issues, currency strength, trade pressures and sluggish international markets continue to constrain growth. Analysts caution that careful monitoring and proactive policy measures will be essential to prevent further slowdown.

Finally, while the Thai economy shows modest signs of recovery, multiple headwinds remain. Both domestic and international factors will determine whether the country can achieve its 2025 growth targets. With exports, tourism, and industrial production under pressure, policymakers face a narrow window to stabilise growth. Therefore, ongoing stimulus, trade negotiations and currency management will remain central to economic performance in the near term.

Political instability and public debt limit Thailand’s ability to tackle structural issues and ensure stable governance

Of course, the problem for Thailand is this. Political instability, coupled with a rise in public debt, means less time and resources are available for a government to act on long-term structural issues. These include the demographic crisis, the education system’s shortcomings, the household debt crisis, and the lack of public investment, which has halved in two decades.

News from Kuala Lumpur of more US economic links and transparency is all very positive for Thailand

Shocking intel emerges at parliamentary hearings on Thursday on the Cambodian scam centre crisis

On top of this, the country faces what promises to be a highly contested general election in 2026, overshadowed by a rising scandal linked to foreign grey capital and Cambodian interference in Thai politics. In short, the country must also deal with a corruption crisis in addition to a lack of constitutional efficacy in providing stable governance.

These are certainly big problems, but they are offset by an economy underpinned by strong financia and external reserves. It is also a resilient economy with resilient people in a uniquely advantageous position in Southeast Asia.