BANGKOK (Reuters) – Thailand’s economy needed a quick short term stimulus to jump start growth, which has been held back by weak exports and consumption, Finance Minister Ekniti Nitithanprapas said on Tuesday in an address to parliament.
Southeast Asia’s second-largest economy is projected to expand by 1.8% to 2.3% this year, according to the state planning agency, and is likely to slow down sharply in the second half of 2025 due to the impact of U.S. tariffs.
Last year’s economic growth rate of 2.5% lagged peers.
“The economy is heading towards a downwards spiral and growth is nearing zero,” Ekniti said, hampered also by soaring household debt and a slowdown in foreign tourist arrivals.
Growth is expected at 1.7% and 0.3% in the third and fourth quarter this year, he said, adding that a co-payment scheme, part of the government’s pledge to revive the economy, will be put to cabinet next week, he added.
Thailand’s manufacturing production index fell 4.19% in August from a year earlier, the industry ministry said at a separate briefing.
The fall was bigger than forecast, as slowing exports, falling tourist numbers and a strong baht weighed on the economy, the ministry said.
Thai exports grew 5.8% in August from a year earlier, the slowest pace in nearly a year, according to the commerce ministry.
Central bank data also showed a current account deficit over the same month at $1.5 billion, with exports to the U.S starting to decline.
The United States set a 19% tariff on imported goods from Thailand, lower than the 36% rate announced earlier and in line with other countries in the region.
Other factors included a weaker car industry and a decline in industrial sentiment, the industry ministry said.
Car production in Thailand, a regional auto making centre, dropped 6.1% in August from a year earlier, recent industry group data has shown.
The ministry’s MPI forecast this year will be lowered from the current forecast of 0% to 0.5% growth, said senior official Passakorn Chairat.
The commerce ministry aims to conclude a reciprocal tax agreement with the United States by the end of the year, Commerce Minister Suphajee Suthumpun told parliament late on Monday.
The ministry will also seek to expand trade in markets like Japan, Singapore, South Asia and the Middle East, and accelerate free trade agreement negotiations with the European Union and South Korea, Suphajee said.
(Reporting by Orathai Sriring, Thanadech Staporncharnchai and Panu Wongcha-um; Writing by Chayut Setboonsarng; Editing by David Stanway)
