BANGKOK, Thailand – Kasikorn Research Center has forecast a turbulent year ahead for Thailand’s business sector in 2025, highlighting significant challenges both from domestic and international factors. The Thai economy is expected to recover at varying rates across industries.
International Pressures Include:
- The slowdown of major global economies, including the United States, China, and the European Union.
- Ongoing conflicts, such as the Middle East tensions and the Russia-Ukraine war, which, if they escalate, could affect shipping costs and the volatility of asset prices, including energy, raw materials, and currency exchange rates.
- The impact of a renewed trade war under President Trump’s administration, which is anticipated to affect Thai industry trade and investments directly and indirectly. This situation requires close monitoring to assess its potential consequences.
Domestic Pressures Include:
-The government’s recent minimum wage increase of 2.9%, effective from January 1, 2025, which is expected to increase business costs by at least 2%, potentially reducing profit margins, especially for labor-intensive industries such as agriculture, construction, hospitality, and retail.
-Plans for tax reforms, particularly the introduction of the Global Minimum Tax at 15% for multinational corporations, which will impact companies with annual revenue exceeding 750 million euros. This policy aims to align with the OECD Pillar 2 standard but could make Thailand less attractive for foreign investment.
-Structural issues such as high debt levels and the challenges of an aging society will likely affect the profitability of businesses in the country.
While government efforts to promote new industries like digital, clean energy, and new tourism concepts (e.g., Entertainment Complexes) could eventually stimulate investment, the positive effects are expected to benefit larger corporations and foreign joint ventures with the necessary resources, including capital, technology, and labor.
Forecast for 2025 Thai Industries:
- Industries Expected to Improve: Health-related products and services, including private hospitals, food, and beverages, are expected to thrive due to the growing health consciousness of consumers and the aging population. Private hospital revenues are projected to grow by 7.0%, up from an earlier estimate of 6.3%.
- Industries with Slower Growth: Hotels, restaurants, retail, and transportation are expected to continue growing but at a slower pace compared to the previous year. The post-COVID tourism recovery will begin to taper off, and both domestic and international purchasing power remains uncertain. Retail and electronics, especially in exports, will also face challenges with expected growth of only 1.6% in 2025.
- Industries Facing Decline: Durable goods, particularly real estate and automotive sectors, will struggle due to weakened consumer purchasing power, especially in the face of high market supply. Housing transfer volume is expected to decrease for the second consecutive year, and domestic car sales will also decline for the third consecutive year.
Kasikorn Research Center highlighted that medium and small-sized businesses (MSMEs) in the manufacturing sector are particularly vulnerable, with many struggling to remain competitive. These businesses may face further reductions, especially in industries like electronics, automotive, chemicals, metals, and fashion. The retail and service sectors will also experience intense competition, making it challenging for businesses to maintain sales amidst cautious consumer spending.
