World Bank Raises Thailand 2025 Growth Forecast to 2.0%
The World Bank raised its 2025 growth forecast for Thailand to 2.0%, up 0.7%, citing strong AI and data‑center exports that offset higher oil prices. It warned inflation will hit 2.2% this year, squeezing incomes and slowing private consumption, while household debt rises sharply among young borrowers. The bank projects 2026 growth of 2.3% and inflation dropping to 1.0%, but expects the current‑account to move into a 2.8% deficit.
The World Bank projects Thailand’s 2025 GDP growth at 2.0%, an increase of 0.7% over its earlier forecast, citing sustained exports of AI‑ and data‑center‑related goods that cushion the impact of higher oil prices stemming from Middle East conflict. Headline inflation is expected to be 2.2% this year as rising energy costs are passed on to consumer prices, eroding real incomes, slowing private spending, and keeping poverty reduction sluggish despite the Khon Khaheng Plus stimulus. Household indebtedness remains high, with non‑performing loans climbing; credit‑card and personal‑loan balances for borrowers under 25 surged 13.5% and 11.5% respectively, the fastest growth among age groups.
External demand and still‑robust investment continue to support Thai economic activity, although the spillover into domestic production remains limited. Exports accelerated to 17.8% in the first half of 2025, led by AI/electronics, machinery and parts, and petroleum products. However, higher energy import costs, together with increased purchases of capital and intermediate goods, are projected to swing Thailand’s current‑account balance from surplus to a deficit of 2.8% of GDP.
The Bank notes that the Thai government has fast‑tracked approval of investment incentives to preserve foreign direct investment (FDI) levels; approved investment rose 37% in the first half of 2025, concentrated in data centers, electronics, electrical appliances and renewable energy. A mix of targeted fiscal measures, temporary price caps, and accommodative monetary policy has helped cushion external shocks but at the cost of higher fiscal outlays. Fuel‑price and electricity‑price controls have limited the pass‑through of costs to consumers, yet have built up significant liabilities for the Oil Fund and the Electricity Generating Authority of Thailand (EGAT).
The Bank of Thailand kept its policy rate at 1.0% at the August Monetary Policy Committee meeting, signalling it will watch inflation trends closely. Looking ahead, the World Bank sees Thailand’s economy expanding further, forecasting 2.3% growth in 2026 with headline inflation falling to 1.0% as the effect of high energy prices wanes. Public debt is projected to reach 68.4% of GDP in 2026, reflecting 400 billion baht (about 2.0% of GDP) of off‑budget spending to alleviate living‑cost pressures and support the energy transition. A key near‑term test will be whether such relief spending remains temporary and targeted or turns into a lasting fiscal burden.
