Thailand Raises 2025 GDP Growth Forecast To 2.1%
Thailand's central bank research group raised its 2025 GDP growth forecast to 2.1% after a US-Iran ceasefire eased oil price concerns, with tourism recovery and AI investment expected to support expansion despite persistent structural econo
KKP Research, the financial business group of Kiatnakin Phatra, has raised its 2025 economic growth forecast for Thailand from 1.9% to 2.1% following a ceasefire agreement between the United States and Iran on nuclear weapons negotiations lasting at least until August. Despite ongoing uncertainty, immediate concerns about oil prices in the second half of the year have eased. Average oil prices in 2025 are now expected to reach $85 per barrel, down from the previous forecast of $92.50. Meanwhile, global private sector investments in artificial intelligence (AI) are expected to be a key factor supporting the economy in the second half of the year.
KKP Research identifies three main channels through which positive effects will reach Thailand's economy:
1) Tourism Sector Recovery from Temporary Stability De-escalation in the Middle East, a major global aviation hub, benefits travel demand. The forecast for foreign tourist arrivals has been raised from 31.8 million to 32.7 million visitors this year (though still down 0.8% compared to 2024, reflecting fragile recovery). Tourism revenue is expected to increase 1.4% to 1.56 trillion baht, with projections for 2026 raised from 34.1 million to 34.9 million visitors.
2) Lower Oil Prices Ease Cost of Living While lower oil prices reduce household and business burdens, the transmission to private consumption remains limited due to tight household finances. Savings tend to go toward debt repayment rather than creating new demand, especially with stricter lending standards. However, KKP Research expects domestic retail oil prices to not decline as much as global markets due to contributions to the Oil Fund to offset accumulated debt of approximately 57 billion baht. Diesel prices are expected to stabilize at 32-33 baht per liter, with the fund clearing its debt completely by early 2027.
3) AI Demand Supports Exports in Select Industries (K-Shape Growth) AI investment growth benefits Thai exports specifically in technology sectors such as HDDs, computers, and electronic components. However, traditional industries like automotive, petrochemicals, and furniture face ongoing competitiveness challenges, resulting in difficult overall industrial production growth despite improved export figures.
Structural Pressures and Interest Rate Outlook
The current account is expected to remain in deficit in 2025 despite lower oil import costs, due to structural factors such as service sector income still below pre-COVID-19 levels and higher capital goods imports driven by AI investment trends.
Inflation is forecast to decline to 2.4% average in 2025 (down from the previous 3.0% forecast) due to lower energy prices. Under these conditions, the Monetary Policy Committee is expected to maintain the policy rate at 1.00% for at least the next 12 months, with possible increases only if inflation rises above expectations or interest rate differentials with major global central banks widen. Rate cuts are possible in the second half of 2026 if domestic economic growth slows, global bond yields peak, and regional currency pressures ease.
