Thailand Grapples with Economic Headwinds as Experts Urge Swift Action

Earthquake recovery stalls tourism, Trump's Tariffs loom large, say economists in Bangkok

 

The Thai economy faces a challenging period as it contends with the lingering impact of a previous earthquake and the potential for significant new tariffs from the United States, according to leading economists in Bangkok.

 

Speaking to Krungthep Turakij, Dr Kobsak Pootrakool, executive vice president and corporate secretary of Bangkok Bank (BBL), warned that the nation is experiencing stronger than anticipated economic headwinds, necessitating an urgent response through both monetary and fiscal policy measures.

 

Dr Kobsak noted that the recovery in the tourism sector, still reeling from the earthquake, is not expected until after August or September this year. This delay casts doubt on Thailand's ability to meet its target of 39.5 million tourist arrivals for 2025.

 

Adding to these concerns are the potential tariff hikes from the United States. Thailand could face import duties as high as 36%, raising fears of global trade friction that would inevitably harm the country's vital export sector and the broader Thai and global economies.


  



 

Dr Kobsak believes the Monetary Policy Committee (MPC) has room to consider lowering interest rates at its upcoming meeting, although the specific date was not mentioned in the original statement from last year.

 

He suggested that further rate reductions could be necessary in the near term to stimulate economic activity and ease the debt burden on households and businesses, particularly those with mortgages, new loans, and variable interest rates.

 

Furthermore, Dr Kobsak emphasised the need for immediate fiscal measures to support the economy. He advocated for targeted interventions that directly address the current economic issues, rather than necessarily requiring substantial government expenditure.

 

In light of potential trade disruptions, he advised Thailand to actively pursue alternative markets beyond the US, focusing on regions like India and ASEAN.

 


"We must pool our resources to enable our exporters to increase shipments to countries other than the US, to mitigate the pressure," Dr Kobsak stated, highlighting the growth opportunities within Asia and ASEAN, particularly through existing and future Free Trade Agreements.
 
 

Attracting more Foreign Direct Investment (FDI) by simplifying investment procedures, including legal reforms, is also crucial for reducing Thailand's reliance on the US market, according to Dr Kobsak.

 

He sees this as an opportunity to transform the Thai economy and develop key infrastructure projects, especially within the Eastern Economic Corridor (EEC).

 


"The key is to forge our own future and find a 'way out' for the country," he asserted. "We must demonstrate to global investors that we are resilient and will emerge stronger from these challenges. Building their confidence is paramount."


 



 

Dr Pipat Luengnaruemitchai, head economist of Kiatnakin Phatra Financial Group (KKP), echoed concerns about the economic impact of the earthquake and potential US tariffs. 

 

While his specific rate cut predictions from last year may have evolved, his underlying concern about the need for both monetary and fiscal support remains pertinent given the ongoing economic pressures.

 



 

Nattaporn Triratanasirikul, deputy managing director from Kasikorn Research Center, also stressed the importance of targeted fiscal policies to address the potential fallout from US trade measures, including support for affected businesses and workers.

 

While acknowledging the constraints of current public debt levels, she agreed that interest rate adjustments could provide some relief to borrowers.

(2025/04/08-00:00)