Thailand, once heralded as an Asian tiger economy, stands at a pivotal juncture. With sluggish growth forecasts of just 2.8% for 2025, the kingdom risks being overshadowed by its dynamic Southeast Asian neighbours. As global economic uncertainties—particularly surrounding US trade tariffs—loom large, Thailand’s ability to navigate domestic structural challenges and implement crucial reforms will determine whether it can reclaim its position as a regional powerhouse or slide further into economic stagnation.
A Sobering Economic Outlook
The National Economic and Social Development Council (NESDC) projects Thailand’s economy to grow between 2.3% and 3.3% in 2025, with a median estimate of 2.8%. The Fiscal Policy Office (FPO) offers a marginally brighter forecast of 3.0%. Yet, these figures pale in comparison to the robust growth rates of regional peers. Vietnam, often dubbed the region’s rising star, anticipates a 6.6% expansion in 2025, following a strong 6.4% in 2024. The Philippines expects 6.2%, while Cambodia maintains a steady 6% trajectory. This stark disparity underscores Thailand’s struggle to maintain its competitive edge in Southeast Asia.
The numbers tell a story of missed opportunities. Thailand’s growth, while stable, lacks the dynamism that once defined its economy in the late 20th century. The kingdom’s challenges are not merely cyclical but deeply structural, rooted in issues that have festered over years of political instability, uneven policy implementation, and global economic shifts. If Thailand is to avoid being relegated to the slow lane of regional development, as some analysts fear, the coming year will be critical. 
Structural Challenges: A Web of Domestic Woes
At the heart of Thailand’s economic malaise lies a complex array of domestic issues. Household debt, exceeding 90% of GDP, has severely curtailed consumer spending power, a critical driver of economic activity. This burden, coupled with hidden unemployment and widening income inequality, paints a troubling picture of an economy struggling to support its population. Private investment, a key indicator of confidence in the country’s future, contracted by 1.6% in 2024, despite government efforts to stimulate growth through public spending.
Contrast this with Vietnam’s success in attracting foreign direct investment (FDI). In the first half of 2024 alone, Vietnam secured over 369.7 billion baht, largely in high-growth sectors like electronics and semiconductors. Thailand, once a magnet for such investments, now finds itself grappling with declining investor confidence. The reasons are multifaceted: bureaucratic hurdles, policy unpredictability, and an ageing workforce all play a role. Without addressing these barriers, Thailand risks falling further behind in the race for regional economic dominance.
Exports, traditionally a strong pillar of Thailand’s economy, offer little reprieve. While Thai exports grew by 5.8% in 2024, projections for 2025 suggest a slowdown to 3.5%, driven by global market uncertainties. This modest performance stands in sharp contrast to Vietnam’s export-oriented manufacturing boom, highlighting Thailand’s struggle to maintain relevance in global supply chains. As US trade tariffs and geopolitical tensions threaten to disrupt international trade further, Thailand’s export sector faces an uphill battle.
Silver Linings: Strengths Amid Struggles
Despite these challenges, Thailand retains several economic strengths that could serve as a foundation for recovery. Inflation remains under control, with projections for 2025 ranging between 0.5% and 1.5%, following a modest 0.4% in 2024. This stability offers policymakers room to manoeuvre without the immediate threat of price spirals. The current account also shows resilience, with a projected surplus of 2.5% of GDP in 2025, up from 2.3% in 2024, providing a buffer against external shocks.
Private consumption, while not a robust driver, is growing at a reasonable pace—4.4% in 2024, with a projected 3.3% for 2025. More promising is the tourism sector, a perennial bright spot for Thailand. International arrivals are expected to reach 36 million in 2025, delivering a vital boost to the economy. From the bustling streets of Bangkok to the beaches of Phuket, tourism continues to be a lifeline, supporting millions of livelihoods and contributing significantly to GDP. Yet, even this sector faces risks, including global economic slowdowns that could dampen travel demand.
The Path Forward: Reforms at a Turning Point
The Joint Standing Committee on Commerce, Industry, and Banking (JSSCIB) has described Thailand’s current situation as a “major turning point.” The government has outlined several initiatives to address the structural challenges, though details remain sparse. These include measures to reduce household debt, incentivise private investment, and streamline bureaucratic processes to attract FDI. There is also talk of labour market reforms to address hidden unemployment and skills mismatches, alongside policies to narrow income inequality.
However, the road to recovery is fraught with uncertainty. Implementing reforms in a politically fragmented landscape is no small feat. Thailand’s history of coups and political unrest has often derailed long-term economic planning, and public trust in governance remains fragile. Moreover, the global economic environment adds another layer of complexity. US trade tariffs, if escalated, could disproportionately impact Thailand’s export sector, while broader uncertainties—such as fluctuating commodity prices and supply chain disruptions—threaten to undermine even the best-laid plans.
Analysts suggest that success will hinge on addressing fundamental issues: modernising infrastructure, improving education and workforce skills, and fostering innovation. If reforms can reduce bureaucratic red tape and create a more predictable policy environment, Thailand may yet lure back foreign investors. But if these efforts falter, the kingdom risks reaching what some fear could be a “breaking point,” with lasting consequences for its economic future.
Regional Context: Learning from Neighbours
Thailand’s struggles must be viewed within the broader Southeast Asian context. Vietnam’s meteoric rise offers valuable lessons. By prioritising export-led growth, investing in industrial zones, and forging strategic trade agreements, Vietnam has positioned itself as a manufacturing hub. Thailand, with its established industrial base and strategic location, could emulate aspects of this model—but only if it overcomes domestic inertia.
Similarly, the Philippines’ focus on digital infrastructure and Cambodia’s steady progress in garment exports highlight the diverse pathways to growth in the region. Thailand’s challenge lies in carving out a niche that leverages its unique strengths, such as tourism and agricultural exports, while addressing systemic weaknesses. Collaboration through regional frameworks like ASEAN could also play a role, offering opportunities to harmonise trade policies and attract collective investment.
Global Uncertainties: Navigating the Storm
As global economic uncertainties persist, Thailand’s ability to adapt will be put to the test. US trade tariffs, a key concern, could disrupt Thailand’s export markets, particularly in sectors like electronics and automotive parts. While no concrete policy shifts have been confirmed, the potential for escalation looms large. If tariffs intensify, Thailand may need to diversify its export destinations and accelerate domestic consumption to offset losses—though both strategies require time and investment.
Beyond tariffs, broader geopolitical tensions and economic slowdowns in major markets like China and the EU could further complicate Thailand’s recovery. The kingdom’s policymakers must balance short-term stimulus with long-term structural reforms, a delicate act under the best of circumstances. Whether Thailand can navigate this storm while staying true to its reform agenda remains an open question.
The decisions made in 2025 will shape whether it reclaims its mantle as a leading Southeast Asian economy or slips into prolonged stagnation. While the challenges are daunting—structural inefficiencies, global uncertainties, and regional competition—the kingdom retains strengths that, if harnessed effectively, could pave the way for revival. Controlled inflation, a resilient current account, and a promising tourism sector offer glimmers of hope.
Yet, hope alone is not enough. If reforms are to succeed, they must be bold, targeted, and sustained, addressing the root causes of economic lethargy rather than offering temporary fixes. As the Joint Standing Committee aptly notes, this is a turning point. Whether it leads to transformation or a breaking point depends on Thailand’s resolve to confront its challenges head-on. For now, the eyes of Southeast Asia—and the world—are on Bangkok, watching to see if this fading tiger can roar once more.
