Thailand has lost its last growth engine

Thailand has lost its last engine of growth and people are abandoning hope for a decent life.

- Chartchai Parasuk

The first half of the previous sentence is being well documented in the media after a sharp drop in the number of tourists coming to Thailand, with the situation likely to get worse when Donald Trump's tariff policy comes into full effect in July.

However, the second half of the sentence about the economic impacts of lower tourism income has not yet been analysed. Thailand has four growth engines: (1) Investment, (2) Consumption, (3) Exports, and (4) Tourism. Many agree the first three burned out some time ago, making Thai GDP growth one of the lowest in Asean.

The only force keeping the economy from plunging into a dark abyss is the last engine — tourism — which has been booming since the end of the Covid pandemic. Tourist numbers are now close to the pre-Covid level. It was projected the number of foreign tourists would increase by 7.5% this year, reaching 38.2 million visitors.

Without a booming tourism sector, the Thai economy would have had negative GDP growth both in 2023 and 2024. Unfortunately, things changed unexpectedly since February 2025.

The number of incoming tourists, which expanded 26.7% in 2024, shrunk 6.9%, 8.8% and 7.6% respectively from February to April. It was the first contraction in five years.

Disappointing tourism performance is the key factor that led to a 1.0% cut in GDP growth projections for 2025. The projected 2.8% GDP growth has now been lowered to 1.8% by the government's planning agency, the National Economic and Social Development Council (NESDC). Both the IMF and the World Bank agreed and both lowered 2025 GDP growth for Thailand to 1.8% and 1.6% respectively. A local research house is even more pessimistic, projecting a 1.4% GDP growth for this year.