By Kitiphong Thaichareon and Orathai Sriring
BANGKOK (Reuters) – A strong first half of 2025 has Thailand’s economy on track to grow 2.2% this year, slightly higher than a previous forecast of 2.1%, the finance ministry said on Wednesday, although it cautioned U.S. tariffs could see momentum slow later this year.
Exports, a key driver of Thai growth, are expected to rise 5.5% this year, up from an earlier forecast of 2.3%, Pornchai Thiraveja, head of the finance ministry’s fiscal policy office, told a press conference.
“In the first half of the year, the economy expanded well, for the second half, we must monitor the impact of U.S. tariffs,” he said, adding the forecasts were based on U.S. tariff rates of 15% to 36%.
In June, the Bank of Thailand lifted its central-case growth forecast to 2.3% for 2025, almost matching last year’s 2.5% growth.
The estimated impact of the border conflict with Cambodia is limited to local property damage, Pornchai said, adding the border trade value between the two countries was just over 1% of total exports. A ceasefire has been declared in the conflict.
There could be some impact on labour as Cambodian workers account for about 12% of registered migrant workers, but businesses are expected to find replacements, Pornchai said.
However, Passakorn Chairat, head of the Industry Ministry’s industrial economics office, saw a bigger impact. He said only about half of an estimated one million Cambodians working in Thailand are registered, and exports to Cambodia could drop by 60 billion baht ($1.85 billion) because of the conflict.
TRADE TALKS ONGOING
Finance Minister Pichai Chunhavajira said on Wednesday the border conflict has not impacted trade talks with Washington, and a final trade proposal should be submitted later in the day.
Thailand is facing a potential 36% tariff on its exports to the United States, its biggest export market, if a deal cannot be reached before August 1.
“Communication is ongoing. Yesterday, we responded to a U.S. proposal but revisions are still being made,” he said.
“The final version is likely to be sent today… We’re working to meet the deadline,” Pichai added.
On Tuesday, Pichai said he expected the final tariff rate to be more aligned with other countries in the region.
Vietnam and Indonesia negotiated U.S. tariffs of 20% and 19%, respectively, much lower than the levels announced in April.
The finance ministry lowered its forecast for foreign tourist arrivals, another key driver of growth, to 34.5 million this year from a previous estimate of 36.5 million.
In 2019, before the pandemic, Thailand had a record of nearly 40 million visitors.
($1 = 32.4500 baht)
(Reporting by Orathai Sriring, Kitiphong Thaichareon and Thanadech Staporncharnchai; Writing by Chayut Setboonsarng; Editing by David Stanway and John Mair)
