By Tredu.com • 10/15/2025
Tredu
Thailand’s economic outlook faces a sharp headwind: a flare-up in US-China trade tensions could seriously threaten its growth, warned the Deputy Governor of the Bank of Thailand. Given Thailand’s dependence on both as major trade partners, the fallout from escalating tariffs or export controls may amplify pressures on its export sectors and macro stability.
Deputy Governor Piti Disyatat made his warning at the IMF-World Bank annual meetings, cautioning that recent signals of aggression, such as the U.S. threatening 100% tariffs on Chinese goods in response to China’s expanded rare earth export controls, represent a “big downside risk.”
He noted Thailand’s exposure: when either the U.S. or China ripples disruption through tariffs or countermeasures, Thailand’s trade flows and growth can suffer. He explicitly said there is little room left to ease monetary policy further, pushing reliance onto fiscal, financial, and structural levers instead.
Thailand’s economy is heavily reliant on trade, particularly with the U.S. and China. A shock in either direction can cascade to supply chains, demand for Thai exports, and investor confidence.
The country is expected to grow only about 2.2% in 2025 and 1.8% in 2026, both below its longer-term potential of roughly 2.7%.
With its policy rate already at 1.5%, the central bank has very limited capacity to cut further without risking financial imbalances.
Thailand has seen negative inflation for six consecutive months, largely due to slumping energy and food prices, which complicates stimulus decisions. Meanwhile, the baht has strengthened by about 5% versus the dollar, which strains competitiveness for exporters.
As US-China trade tensions flare up, Thailand’s status as a small, open, export-driven economy exposes it to outsized risk. The Deputy Governor of the Bank of Thailand is clear: the worst-case trajectory could meaningfully derail growth, especially given limited monetary levers and already soft inflation. The core theme: in global storms, export pivots like Thailand must absorb more than their share of shock.
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