BANGKOK — Thailand is on track for a modest economic recovery in 2025, with growth expected to reach 2.9%, up from 2.6% in the previous year. This uptick is primarily driven by stronger domestic demand and targeted fiscal measures, according to the World Bank’s latest Thailand Economic Monitor (February 2025). The report, titled “Unleashing Growth: Innovation, SMEs, and Startups,” offers cautious optimism about the near-term recovery while emphasizing the urgency of structural reforms to ensure long-term competitiveness.
Tourism remains a central pillar of Thailand’s recovery. With international arrivals forecast to return to pre-pandemic levels by mid-2025—up to 40 million visitors, compared to 35.3 million in 2024—the hospitality and service sectors are expected to see renewed momentum. Meanwhile, the government’s Digital Wallet cash transfer initiative has helped boost private consumption, contributing an estimated 0.3 percentage points to GDP in 2024. The program also contributed to a reduction in poverty to 8.2% and narrowed income inequality, although it came at a high fiscal cost of THB 145 billion, equivalent to roughly 0.8% of GDP (World Bank, 2025).
While domestic indicators are improving, external risks continue to weigh on Thailand’s export performance. Slower growth in key markets such as the United States and China is expected to dampen goods exports despite an ongoing recovery in the global electronics sector. Inflation remains subdued—projected at 0.8% for 2025—well below the Bank of Thailand’s target, providing room for a cautiously accommodative monetary stance. However, both the government and central bank will need to strike a delicate balance between supporting recovery and maintaining fiscal and financial stability.
The more critical issue, however, lies in Thailand’s long-term economic trajectory. The World Bank warns that without urgent policy reforms, the country’s potential growth rate could decline to 2.7% by 2030, down from 3.2% in the previous decade. This downward trend could hinder Thailand’s efforts to achieve high-income status. Key areas requiring attention include tax reform, infrastructure investment, and enhanced productivity—especially in the private sector.
A significant portion of the report focuses on the strategic role of small and medium enterprises (SMEs) and startups in driving innovation and growth. SMEs account for nearly 70% of employment and 35% of GDP, yet face persistent challenges: limited financing, insufficient early-stage support, gaps in digital skills, and regulatory constraints that restrict competition and market access. These barriers not only inhibit innovation but also limit Thailand’s ability to fully integrate into global value chains (World Bank, 2025).
Diplomats and investors alike should take note of Thailand’s longstanding ability to adapt to shifting economic landscapes. The country has the institutional foundations and policy experience to implement meaningful reforms. To unlock new growth drivers, the report recommends better alignment between the public and private sectors on innovation policy, expanded access to R&D funding, and targeted skills development. If effectively addressed, these areas could position Thailand as a regional leader in sustainable innovation and economic resilience.
For business leaders with exposure to Southeast Asia, the outlook offers both opportunities and caution. While near-term recovery is on firmer ground, long-term investment confidence will depend heavily on how decisively Thailand pursues structural reform. The window for action is open—but narrowing.
Se Hoon Kim
Se Hoon Kim is the Managing Editor at Global Strat View.
