As we move into 2025, Thailand’s economy presents a mix of opportunities and challenges for traders. While inflation remains subdued and the tourism sector continues to recover strongly, weak exports and global trade tensions are creating headwinds. Government stimulus measures are providing some support, but structural issues and external pressures mean traders need to stay vigilant to navigate this complex environment effectively.

At EBC Financial Group (EBC), we’ve been tracking these developments closely to provide traders with actionable insights into how these trends could shape the market this year.

Inflation and Monetary Policy: A Balancing Act

Thailand’s inflation story has been one of subdued growth throughout 2024, with the average inflation rate at just 0.4%—the lowest in four years. However, December saw a slight uptick in the Consumer Price Index (CPI), which rose by 1.23% year-on-year, returning to the Bank of Thailand’s (BoT) target range of 1%–3% for the first time in seven months.

In response to economic concerns, the BoT reduced its policy interest rate by 25 basis points to 2.25% in October 2024, marking its first rate cut in over a year. The BoT held this rate steady in December, citing economic uncertainties and the need for flexibility. For 2025, the BoT projects GDP growth at 2.9% and inflation at 1.1%, staying within its target range.

Despite these measures, structural challenges remain a concern. Weak exports and subdued private sector investment are limiting growth potential, while global trade disruptions continue to weigh on Thailand’s export-driven economy. Finance Minister Pichai Chunhavajira has hinted at further rate cuts, emphasising the importance of coordinated fiscal and monetary policies to support recovery efforts.

For traders, this interplay between domestic policy adjustments and external factors like U.S. Federal Reserve actions creates both risks and opportunities in Thailand’s financial markets.

Tourism Recovery Fuels Growth Amid Market Challenges

Thailand’s tourism sector continues to be a bright spot in its economic recovery. In 2024, the country welcomed approximately 35.5 million foreign visitors, significantly boosting economic activity. However, despite this strong performance, the Stock Exchange of Thailand (SET) has struggled compared to regional peers due to political uncertainty and inconsistent economic policies.

This disconnect between tourism recovery and stock market performance highlights underlying challenges that could influence investor sentiment. For traders, this may present opportunities to identify undervalued sectors or stocks that could benefit from improving fundamentals as political clarity emerges.

The government has also introduced several fiscal measures aimed at stimulating growth. These include a $14 billion stimulus package targeting about 45 million citizens, a minimum wage increase effective January 2025 by 2.9%, and tax incentives of up to 50,000 baht to encourage consumer spending. Sectors such as consumer goods and tourism-linked industries stand to benefit from these initiatives, while infrastructure projects tied to Thailand’s development plans could offer long-term growth potential.

Global Trade Tensions Add Complexity

Thailand’s economic outlook is also being shaped by evolving U.S.-China trade dynamics. Newly imposed U.S. tariffs on Chinese goods are expected to take effect this year, potentially leading China to implement additional stimulus measures if weak consumer spending persists domestically.

This could have ripple effects on Thailand’s economy as China remains a key trading partner and the largest source of foreign tourists for Thailand. In 2024, Chinese nationals accounted for the majority of tourist arrivals despite safety concerns earlier in the year.

Gold remains an important safe-haven asset for Thai investors amid these uncertainties. Given its significant role in Thailand’s economy, gold may become an increasingly central component of portfolio risk management strategies as global trade tensions continue.

What Traders Should Watch

For traders navigating Thailand’s markets in 2025, it will be crucial to monitor:

- Inflation Trends: Changes in CPI figures and BoT policy adjustments that could impact interest rates and market sentiment.

- Tourism Growth: The recovery trajectory of international arrivals and its influence on related sectors like hospitality and retail.

- Export Performance: Developments in global trade flows and their impact on Thailand’s export-driven industries.

- Safe-Haven Assets: The role of gold amid heightened global uncertainty as a hedge against market volatility.

By staying informed about these key areas, traders can better position themselves to take advantage of emerging opportunities while managing risks effectively.

Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.