A Bank Compares Thailand's Economy to Asia's Sick Man

Kasikorn Bank warns of the worrying situation of the Thai economy, compared to 'Asia's sick man'.

According to Burin Adulwattana, Managing Director and Chief Economist of Kasikorn Research (KResearch), the GDP growth target of 2.4% for 2025 is threatened by several negative factors, mainly the trade war led by the United States.

Proliferation of factory closures

Factory closures are multiplying, particularly affecting medium and large enterprises in the automotive and electronics sectors, with a notable increase in closures at the beginning of 2025.

The global economic slowdown and the US tariff policy 'Tariff 2.0' exacerbate this crisis, directly affecting Thai exports.

Low domestic demand and high debt

Burin stresses that weak domestic demand and the difficulties of low-income households in managing their debt require urgent measures.

Boosting middle-class consumption and attracting more foreign investment are becoming essential.

Moreover, the thriving informal economy could play a key role in economic recovery if it were better integrated into the formal sector.

Major impact of U.S. tariffs

Trade tensions, particularly the possible U.S. tariff hike to 25% on Thai exports, could significantly reduce the country's GDP, potentially bringing it close to 2.0%.

Increased competition in the global automotive market

Rujipan Assarut, Deputy Director of KResearch, warns of intensifying competition in the global automotive market, exacerbating overproduction and causing prices to drop globally, except in the United States.

This increased competition is expected to affect Thailand's car exports and the automotive manufacturing sector, which currently relies on exports for 67% of its production.

Risks for the manufacturing industry and employment

Kevalin Wangpichayasuk, also Deputy Director of KResearch, indicates that the Thai manufacturing industry could experience a 1.0% contraction in 2025, with a significant decline in the electronics, automotive, and metallurgical sectors.

This situation particularly threatens low-skilled jobs and increases social risks.

Tourism is no longer enough

Finally, Nattaporn Treratsirikul notes that tourism, once an economic pillar, can no longer compensate for losses due to declining tourists from China and Malaysia, combined with increased international competition.

Chinese tourism is declining due to cases of tourist abductions by call centers in Myanmar and Cambodia, and Malaysian tourism, due to recent attacks in the south of the country.

See: Thailand: increased security in the south after deadly attacks

KResearch therefore calls for quick and effective action to avoid a worsening of this major economic crisis.

See also:

The sluggish economy should force the Bank of Thailand to lower its rates

Credit crisis: the Bank of Thailand sounds the alarm

Towards a major financial crisis in Thailand?

Source: The Nation Thailand