SCB EIC downgraded the 2025 global economic growth forecast to 2.5% due to Trump 2.0 policies, intensifying geopolitical tensions and trade protectionism, impacting investment, trade, and Thailand’s economy significantly.
SCB EIC Revises Economic Forecasts
SCB EIC has adjusted its 2025 global economic growth projection from 2.8% to 2.5%, attributing this downgrade to the expected ramifications of Trump’s “2.0” policies, which are likely to heighten geopolitical tensions and trade protectionism. While countries like Germany and South Korea are working on countermeasures, political instability might hinder effective solutions. The U.S. economy could see moderate negative impacts, although certain tax and deregulation policies could boost domestic investment.
Monetary Policy and Thai Economic Outlook
Global monetary policies are becoming increasingly uncertain, with the U.S. Federal Reserve expected to tread cautiously due to rising inflation risks. SCB EIC anticipates a 0.25% rate cut in February 2025. Meanwhile, Thailand’s economy is projected to grow by 4% in Q4 2024, yet trade protectionist measures could pose risks starting in H2 2025, particularly due to U.S. import tariffs affecting key sectors.
Addressing Economic Inequality
Thailand faces significant macroeconomic challenges, exacerbated by global conditions and internal vulnerabilities. Addressing these disparities requires strategic policy actions focusing on resilience for low-income individuals, skill development for adapting to market changes, and equitable resource access to foster inclusive growth. The future of Thailand’s economic development hinges on bridging the gap between the “two worlds” of different financial realities among its citizens.
Thai Economy Expected to Grow Significantly in Q4 but Likely to Encounter Challenges from Trump 2.0 Starting H2 2025
The Thai economy in Q4 is expected to grow by 4%, driven by continued momentum from export, government spending, and the tourism sector. SCB EIC projects the Thai economy to expand by 2.7% in 2024. However, the economy is likely to feel the impact of Trump 2.0’s trade protectionist measures since H2/2025.
Thailand is more likely to face a significant risks of being subjected to U.S. import tariffs, as more than 70% of total exports to U.S. fall into product categories targeted by the U.S. for reducing trade deficits and promoting local supply chains. These categories include electronics, automobiles and parts, machinery, and computers.
Moreover, China’s overcapacity issues will put additional pressure on the competitiveness of Thai products both domestically and internationally, leading to an export slowdown. This will further exacerbate the challenges facing Thailand’s manufacturing sector, which has yet to recover, even with the anticipated additional fiscal stimulus next year.
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