1% GDP growth impacts will be severe

Where did I get the idea that GDP growth in the second half of 2025 would only be 1.0%? The answer is the government, as the National Economic and Social Development Council (NESDC) told me so.

- Chartchai Parasuk

In an announcement on Monday, the NESDC announced that Q2/2025 GDP growth was 2.8% after 3.2% growth in Q1/2025. That put GDP growth in the first half of the year at 3.0%. The NESDC then projected that GDP growth for the whole year would be 2.0%.

The number implies that GDP growth for the second half of the year is projected to be only 1.0%.

Several private research houses do not agree with the NESDC's 1.0% growth projection. K-Research, the economic research unit of Kasikorn Bank, projected 2025 GDP growth at 1.5%, implying a flat 0.0% growth for the second half.

My projection is considerably lower than any projections with negative 5.5% growth for the second half of 2025. I have valid mathematical and theoretical reasons for why my projection is more pessimistic. Read on, and I will explain.

The purpose of this article is not to scare readers with negative growth or flat growth projections, but to warn readers that the second half will be much worse than the first. Preparation for economic hardship is strongly advised.

The first reason is the chronic deterioration of Thai economic fundamentals. If one takes out the effect of export acceleration, GDP growth in the first half of 2025 would have mathematically been reduced to 0.0%. Thailand has not seen zero growth in decades, except during the Covid years.

The weak economic structure is camouflaged by the onetime event of export acceleration to the US. Exports expanded three times faster than normal so as to beat Donald Trump's reciprocal tariff deadline in early April. The acceleration continued in Q2 as the president extended the deadline to the end of July.

While the export sector was artificially booming, the tourism sector was dying. The usual double-digit growth in this sector — the last pillar of the Thai economy — dipped to 2.7% growth in Q2.