CIMB Bank Forecasts Thai GDP Growth Stuck Below 3%

CIMB Research is monitoring a new round of trade tensions and has submitted five economic recommendations to the Thai government, emphasizing the need for policies that create long-term jobs and income rather than short-term cash distribution.

Amornthep Javaala, Assistant Managing Director and head of CIMB Thai Bank's research division, revealed that Thai economy in Q3 2025 is showing more signs of brightening after passing through the year's weakest period in Q2. Positive factors stem from significantly lower oil prices and a temporary ceasefire agreement between the US and Iran, though risks of renewed conflict remain. Thai exports are a critical support, and government measures are helping sustain purchasing power. The research team assesses that Thailand's economy will face growth risks of 2-2.5% over the next 3-5 years, with very little chance of returning to growth above 3% unless there is clearer economic structural reform. This presents a long-term problem for Thai economy if not addressed.

CIMB's five recommendations for Thai economy in Q3 2025 are:

1. Average oil price of $80 per barrel supports economic recovery. After oil prices surged past $100/barrel in Q2 before falling below $70/barrel in late June-early July, CIMB expects Q3 average prices around $80/barrel. While risks remain, this level supports Thai economic recovery.

2. Federal Reserve keeps rates at 3.75%; BOT maintains policy rate at 1%. CIMB believes US inflation will gradually ease with energy prices, and US inflation is not primarily demand-driven as rents and wages are not rising sharply. The Fed may not need to raise rates to combat inflation and will rebalance next year, while Thailand's central bank is likely to hold its policy rate at 1% due to cost-side inflation pressure rather than demand-side.

3. New trade war is the biggest risk for the second half. While energy tensions ease, new risks are shifting toward trade warfare. The US may revive Section 301 measures previously used against China, pressuring trading partners and creating new global trade volatility that could impact Thai exports.

4. Baht strengthens to 33.10 per dollar. GDP growth in 2025 may reach 2%, driven mainly by private investment rather than consumption. The baht is expected to strengthen to around 33.10 per dollar in Q3 from capital inflows and stable US interest rate trends.

5. Government must accelerate confidence-building policies. The government must build confidence, generate revenue, reduce budget deficits, maintain fiscal discipline, and avoid breaching the 70% debt-to-GDP ceiling within 2-3 years to preserve the country's credit rating. CIMB urges the government to focus on investments through public-private partnerships or new ventures that create jobs and long-term income for people, rather than short-term cash handouts. Past experience shows consumption tends to decline after such measures end, so the bank prefers policies that drive job creation, employment, and income generation.

Although the overall Q3 economy is improving, private consumption remains flat and income growth is slow while cost of living remains high.