Global economic growth is projected to slow to 2.3% by 2025-26 due to trade tensions, policy uncertainty, and geopolitical risks. Thailand’s growth remains subdued below 2%, with weak investment and consumption.
Global Economic Outlook and Trade Challenges
The global economy is expected to slow to 2.3% growth in 2025 and 2026, down from 2.8% previously, mainly due to trade tensions and policy uncertainty. U.S. tariff hikes create supply-side shocks slowing growth and increasing inflation, while other countries face demand pressures from weaker exports. Heightened uncertainty around U.S. trade policy and financial market volatility is undermining business and household confidence, leading to postponed investments and reduced consumption. Trade disruptions are expected to worsen from mid-2025, with prolonged U.S. negotiations and legal challenges adding to uncertainty.
Thailand’s Economic Slowdown and Fiscal Constraints
Thailand’s growth is projected below 2% through 2026, slowed by global trade issues and structural domestic challenges. SCB EIC forecasts 1.5% growth for this year and 1.4% next year, with risks of technical recession due to weak exports and investment. Tourism support is reduced, with lower foreign arrivals amid cautious spending. Private investment contracts on trade uncertainty and declining confidence, while household deleveraging and labor vulnerabilities weigh on consumption. Fiscal stimulus is limited by mounting public debt, restricting government intervention.
Monetary Policy and Business Environment
Major central banks are expected to ease policies, with the Fed cutting rates modestly and China lowering rates to support growth. Thailand’s MPC may reduce rates twice more this year to ease tight financial conditions, despite structural challenges limiting impact. Businesses face rising risks from trade disputes, geopolitical tensions, and import competition, though opportunities remain in sectors like health, wellness, and tourism targeting emerging consumer groups. Adapting to global trends and niche markets provides prospects amid uncertainty.
