PATTAYA, Thailand – Thailand’s economy, excluding the tourism sector, is already in a state of recession, according to an analysis released on Tuesday alongside the National Economic and Social Development Council’s (NESDC) first-quarter report and outlook for 2025.
The country’s GDP grew 3.1% in Q1 2025, down slightly from 3.3% in Q4 2024. While this still reflects positive growth, it marks the slowest expansion rate in ASEAN. The NESDC has revised its 2025 GDP forecast down to between 1.3% and 2.3% (median 1.8%) due to weakening global trade, rising household debt, and ongoing economic uncertainties, including U.S. tariff policies and volatile agricultural prices.
Business closures continue to rise, with the Department of Business Development reporting 3,107 company shutdowns in Q1—up over 10% year-on-year—with lost registered capital exceeding 11.8 billion baht.
Research from KKP Financial Group underscores that the Thai economy’s current growth is almost entirely driven by tourism. Excluding this sector, economic activity has contracted since Q4 2022, with only marginal growth near zero in late 2024. Other key sectors—industry and domestic consumption—have been stuck in prolonged downturns, with little spillover from tourism.
Looking ahead, all three of Thailand’s key economic engines—tourism, manufacturing, and agriculture—are projected to slow in 2025:
Tourism Momentum Fading: The recovery in international arrivals is slowing, particularly due to the absence of large-scale Chinese tourism.
Manufacturing Under Pressure: Thailand’s industrial sector, already struggling, is expected to face further headwinds from U.S. import tariffs, dampening key export performance.
Agriculture Weakening: The sector shows signs of decline, especially in rice exports, now challenged by India’s re-entry into the white rice export market.
These combined factors have led KKP Research to project GDP growth of just 1.7% for 2025, assuming U.S. tariffs remain at 10% and the global economy softens without falling into full recession. Thai exports, which surged early in the year as companies raced to beat tariffs, are expected to slump sharply in the second half—resulting in annual export growth of under 1%.
KKP warns that for Thailand to return to 3% GDP growth, it would require either an annual increase of 7–10 million more tourists or a sustained 5% industrial growth rate—levels that are increasingly difficult to achieve amid structural constraints, competition from Chinese goods, and geopolitical trade tensions.
