SCB EIC expects the Monetary Policy Committee (MPC) to cut interest rates in December and to 1% by mid-69.
28 Nov 2568 Economic and Business Research Center, Siam Commercial Bank (SCB EIC) Thailand's economic growth forecast for 2568 has been revised upwards to 2.1%, driven by exports and government stimulus measures. Economic growth in 2569 is expected to be lower than 1.5%, with the impact of US tariffs becoming more pronounced amid continued domestic vulnerabilities. The Monetary Policy Committee (MPC) is expected to cut interest rates to 1% in the first half of next year.
The Thai economy in 2568 is expected to expand well, with exports expanding significantly and government stimulus measures helping to support it.
SCB EIC has revised its 2568 Thai economic growth forecast upwards to 2.1% (previously 1.8%), driven by higher-than-expected merchandise export growth, driven by gold exports, the global electronics cycle, and the global economy's ability to cope with US tariffs. This aligns with the Thai Q3 2568 economic growth figures, which showed higher-than-expected growth of 1.2% YOY.
The main supporting factors are merchandise exports and private investment. Looking ahead to the fourth quarter, the Thai economy is expected to grow by close to 1% YOY, improving from the previous outlook due to measures to accelerate budget disbursement for the 2026 fiscal year. Disbursement rates in October are beginning to show a much higher than normal rate, particularly for investment. Private consumption is also expected to improve due to economic stimulus measures, particularly the 6.7 billion baht "Half-Half Plus" program.
However, SCB EIC expects the Thai economy to grow at a slower pace in 2569, maintaining its previous estimate of 1.5%. The economic engine will almost entirely slow down, particularly exports, which are likely to contract due to several factors, including:
- The effects of front-loading are gradually fading after the US began imposing high import tariffs.
- The US may impose additional tariffs, particularly on electronic goods and counterfeit goods.
- The global economy is slowing down due to global trade uncertainty and the impact of Trump's tariffs.
- Chinese goods compete better in the US market after the US and China reached a one-year agreement to reduce high tariffs.
Private sector investment will continue to expand due to imports of machinery and capital goods, but the economic impact may not be significant as Thailand's import content has significantly increased compared to the past, as reflected in the significant increase in Thai imports, particularly from China. Therefore, this may not benefit the Thai manufacturing sector and poses an additional risk from the transshipment tariff issue with the United States.
While foreign tourist arrivals to Thailand are gradually recovering, the tourism sector still faces challenges from the relatively slow recovery of Chinese tourists. Headline inflation has been negative for seven consecutive months and is expected to remain negative until the second quarter of 2026. This is partly due to the declining trend in fresh food and energy prices. These products account for more than half of Thailand's inflation basket, which is relatively high compared to other countries.
The policy interest rate is expected to gradually decrease further to 1% within the first half of next year.
SCB EIC estimates the policy interest rate will be cut to 1% within the first half of next year and remain low until the end of the year. There is still a possibility of another rate cut by the Monetary Policy Committee (MPC) in December, as the Thai economy is expected to experience very low growth through the first half of 2569 and face political uncertainty surrounding the new election. Headline inflation is expected to hover near 0% throughout next year.
In addition to supply pressures, weak domestic demand also reflects a potential risk of deflation. Furthermore, Thailand's financial conditions remain tight, particularly in the household and SME sectors, as reflected in continued credit contraction. A lower policy interest rate will help support the economy, reduce debt repayment burdens, and enhance the effectiveness of additional government debt relief measures.
The global economy grew better than expected this year, but will slow down next year as the impact of US tariffs becomes more apparent.
Global Economy 2568 The expansion was better than expected due to accelerating trade before the US imposed tariffs and investment trends related to AI. SCB EIC expects the global economy to expand by 2.7%YOY (previously 2.5%YOY). The US economy will benefit from AI-related investments. Asian economies will benefit from electronic exports and front-loading exports to the US.
while Global Economy 2569 It will slow down as global trade is more clearly affected by the US tariffs. The global economy in 2569 will expand at a slower pace of 2.5%YOY, especially in Asian economies that rely heavily on exports to the US market. However, AI-related investments, driven by accommodative fiscal and monetary policies, will remain a key driver of the global economy next year.
The United States and China have reached a temporary trade agreement, but the US import tariff policy remains highly uncertain. The US and China held trade talks in late October, agreeing to temporarily reduce high tariffs between the two countries and allowing China to resume rare earth exports to US producers. This agreement is valid for one year, so the development of the trade war between the two superpowers must continue to be monitored.
Furthermore, the US Supreme Court is likely to rule that some of the Trump administration's tariffs are unlawful, which would force the Trump administration to use other legal means to maintain tariffs, adding to the uncertainty surrounding US tariff policy going forward.
The US Federal Reserve (Fed) is likely to continue cutting interest rates by another 25 bps in December and is likely to gradually cut rates by another 50 bps in 2569 due to the slowing labor market trend. The risk of accelerating inflation from tariffs must also be monitored. The Bank of Japan (BOJ) is gradually raising interest rates to 1% next year, likely to hold rates steady for the rest of the year, but will gradually increase interest rates by a total of 50 bps to 1% next year after clearer wage increase data is released early next year.
Other major central banks are maintaining accommodative monetary policy to address risks next year. The People's Bank of China (PBOC) is likely to cut interest rates by another 10 bps this year and a total of 20 bps in 2569 to support the Chinese economy, while the European Central Bank (ECB) is likely to hold rates steady at 2%.
Read all economic news throughout Thailand here.
