World Bank Forecasts Thailand's 2025 GDP Growth at 2.9%, Inflation Below Target at 0.8%
February, 15 2025
Inflation Below the Bank of Thailand’s Target
The latest Thailand Economic Monitor report states that inflation in 2025 is projected to be 0.8%, below the Bank of Thailand’s (BoT) target. While economic recovery is underway, structural challenges must be addressed to enhance competitiveness and ensure sustainable growth.
Economic Growth Remains Below Potential
Despite positive expansion in private consumption and tourism, these factors alone may not be sufficient for long-term growth. The report highlights the need for increased investment in infrastructure and new technologies to strengthen Thailand’s global competitiveness.
Economic Stimulus Measures Help Reduce Poverty but Impact Fiscal Stability
The government’s 10,000-baht digital cash transfer program has boosted consumption and helped reduce the poverty rate from 8.5% in 2023 to 8.2% in 2024. However, this measure has a significant fiscal cost of 145 billion baht, or 0.8% of GDP, which could pose future financial challenges.
Tourism Recovers but Over-Reliance Poses Risks
Thailand’s tourism sector is expected to see strong growth, with tourist arrivals projected to increase to 40 million in 2025 from 35.3 million in 2024, reaching pre-pandemic levels. However, the report warns that excessive reliance on tourism may make Thailand’s economy vulnerable to external factors such as global economic fluctuations and geopolitical uncertainties.
Household Debt Remains a Major Concern
Despite government support measures, such as debt moratoriums and interest rate reductions, household debt remains high at 90.7% of GDP—one of the highest levels in Southeast Asia. Addressing this issue requires careful management to avoid financial sector instability.
SMEs and Startups: Key Drivers of Future Growth
Small and medium-sized enterprises (SMEs) and startups are expected to play a crucial role in Thailand’s future economic development. SMEs currently account for 99.5% of all businesses and employ 69.5% of the country’s workforce. However, limited access to funding and technology remains a significant barrier to their growth.
Christian Quijada Torres, Senior Private Sector Specialist at the World Bank, emphasized, “Innovation and entrepreneurship are no longer optional if Thailand wants to compete in the rapidly changing global economy.”
Structural Reforms Needed for Sustainable Growth
The World Bank recommends that the Thai government take key measures to strengthen the economy, including:
- Enhancing tax collection efficiency and reducing reliance on cash distribution stimulus policies.
- Promoting investments in infrastructure and new technologies to boost the country’s competitiveness.
- Supporting SMEs and startups with better access to funding and technology to drive productivity and innovation.
- Reforming legal and regulatory frameworks to eliminate barriers to business competition and foreign investment.
Conclusion
Thailand’s economy in 2025 is expected to recover due to domestic consumption and public investment. However, high household debt and investment constraints remain key challenges. If Thailand aims to become a high-income country by 2040, structural reforms that enhance flexibility and innovation-driven growth will be essential for long-term global competitiveness.