The Asian Development Bank (ADB) has lowered its Thai GDP growth estimates for this year and next, citing export deceleration, a slow recovery of foreign tourist arrivals, as well as weakened private consumption and investments.
In its latest Asian Development Outlook (ADO) report, the Manila-based bank projects Thai GDP to expand 2% this year, down from 2.9% forecast in April, with the economy slowing in the second half as front-loaded shipments to the US end.
Economic growth is expected to slow further to 1.6% in 2026, down from the bank’s previous forecast of 2.9%.
“The 19% US tariff on exports will slow shipments, particularly of electrical equipment, machinery, metals, processed food and vehicles. Small businesses may find it difficult to adjust to the tariffs compared with their US counterparts, which often benefit from larger operations and lower production costs,” noted the report.
Meanwhile, a sluggish recovery of tourist arrivals together with a weakened global economy is dampening the tourism sector. The forecast for foreign tourist arrivals was downgraded from 39.5 million in April to 34 million, primarily due to fewer inbound tourists from China.
“Increased competition from other regional destinations is also contributing to the projected slowdown. Many countries in the region are spending heavily to attract international visitors by developing tourism infrastructure and offering competitive costs. Weakened currencies in some countries also makes them more affordable to foreign tourists,” ADB noted.
The bank downgraded Thailand’s private consumption growth from the ADO April 2025 forecast due to declining income, weak consumer confidence, and a drop in farm incomes based on lower agricultural prices.
“The impact of US tariff hikes and sluggish tourism will likely affect employment and income,” noted the report.
“Persistently high household debt will continue to limit household purchasing power.”
In the latter half of 2025, private consumption may benefit from government domestic tourism stimulus programmes, though the impact could be limited due to registration issues, according to ADB.
Fiscal stimulus measures, particularly for infrastructure, could encourage private investment. However, private investment will be hurt by the US tariff hikes, concerns over domestic political stability, and a weakness in services stemming from the slow tourism recovery, noted the report.
ADB added risks to the outlook “remain on the downside”.
“Domestic economic fragility, including political uncertainties and high household debt, heightened the risk of a slowdown in domestic demand,” noted the report.
“A larger impact from US tariffs, a slower recovery in tourism, and increased geopolitical tensions could slow economic growth to fall short of the forecast.”