Thailand GDP Growth Slows to 1.9% on Middle East Crisis
Thailand's economic growth slowed to 1.9% in the second quarter due to Middle East conflict impacts on energy and commodity costs, prompting the government to launch emergency support programmes and accelerate its shift to clean energy.
Deputy Prime Minister Ekniti Nitithanprapas outlined Thailand's economic outlook following the National Economic and Social Development Council's announcement that second-quarter 2025 GDP grew 1.9%, easing from 2.8% in Q1. The figure aligns with Finance Ministry projections and reflects Middle East conflict impacts starting in late March, which cascaded through the economy in Q2. The impact began with an oil crisis, flowing into commodity costs and living expenses, with Q2 inflation rising to 2.7% from minus 0.5% in Q1, while private consumption slowed to 1.9% from 3.3%.
Without breaking the cycle of expensive energy, expensive goods, and weakened purchasing power, the economy risks a food-security crisis and fresh economic pressure. This prompted the government to issue an emergency borrowing decree to advance the Thailand Helps Thailand Plus programme, supporting purchasing power and reducing people's cost-of-living burden. For final-quarter rollout, results from the initial phase ending in Q3 must be assessed alongside remaining budget to maximize benefit to the country.
The current account balance shows another concern: Q2 recorded a deficit of 17.6 billion dollars, or nearly 600 billion baht, versus a Q1 surplus of 1.4 billion dollars, reflecting high dependence on imported energy. Ekniti said the government must accelerate the shift from fossil fuels to clean energy, with 200 billion baht allocated for the transition—rooftop solar, electrical grids, energy storage, and electric vehicles—representing investment in future infrastructure, not temporary spending.
Positive signals came from private-sector investment, which expanded 13.4%, the highest in 11 years and double-digit growth continuing from Q1's 10.1% rise. Thailand Fast Pass from the Board of Investment contributed to real investment reaching 255 billion baht in Q2. Most funding flowed into S-Curve industries including electronics, AI, clean energy, and agricultural processing, while exports of goods and services grew further to 12.5% from 12.1%, with electronics as a key driver.
Ekniti said these figures show Thailand is entering the world's new economy. The real question is not whether Thailand will chase new industries, but how to seize opportunities to pull Thailand into the global supply chain and extend that momentum to domestic sectors. Though Q2's 1.9% growth remains unsatisfactory, it confirms the government's economic assessment and support measures are on track. Thailand's economy is now in a "transition-bridging phase" to return to full growth potential ahead.
