Economy loses steam in Q1

Momentum softens at start of 2025: GDP growth moderated to 3.1% year on year in the first quarter of 2025 from 3.3% in the fourth quarter of last year. Q1’s figure surprised markets on the upside. On a seasonally adjusted quarter-on-quarter basis, economic growth sped up to 0.7% in Q1 from the previous period's 0.4% growth.

Domestic sector weighs on Q1’s result: Softer domestic momentum chiefly drove the moderation in annual GDP growth. Household spending increased 2.6% in the first quarter, which was below the fourth quarter's 3.4% expansion. Persistently high household debt, subdued loan growth from commercial banks and rising economic uncertainty dampened the expansion. Additionally, public consumption growth was the slowest since Q2 2024, expanding 3.4% (Q4 2024: +5.4% yoy). Fixed investment growth waned to 4.7% in Q1, following 5.1% logged in the previous quarter; private investment contracted for the fourth consecutive quarter. On the external front, exports of goods and services growth sped up to 12.3% year on year in the first quarter, which marked the best reading since Q4 2021 (Q4 2024: +11.5% yoy). Conversely, imports of goods and services growth moderated to 2.1% in Q1 (Q4 2024: +8.2% yoy).

Economy to lose further steam by year-end: GDP growth is set to cool gradually through Q4 2025 as private investment and spending remain lackluster and rising global protectionism caps exports growth. As a result, the economy will lose steam from 2024 in 2025 as a whole, growing at one of the weakest paces in ASEAN. Stronger-than-expected monetary and fiscal stimulus poses an upside risk to economic growth, while weaker-than-expected external demand due to U.S. tariff hikes poses a downside risk.

Panelist insight: United Overseas Bank’s Enrico Tanuwidjaja and Sathit Talaengsatya said: “Looking ahead, Thailand’s economy is expected to grow at a slower pace, weighed down by subdued domestic and external demand amid ongoing global trade policy uncertainty and a weaker global outlook. While government spending—particularly public investment—and private consumption will continue to provide some support, private investment remains fragile due to negative sentiment and cyclical headwinds, despite a record FDI approval value by the BOI last year. Tighter financial conditions are also expected to constrain domestic demand.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Thai investment projections for the next ten years from a panel of 19 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable investment forecast available for Thai investment.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Thai investment projections.

Want to get access to the full dataset of Thai investment forecasts? Send an email to info@focus-economics.com.