Data from Clients & Markets, Deloitte Thailand <\/span><\/strong>reveals that there is still debate over whether Thailand's economy in the "small snake" year will face more challenges than the previous "big snake" year. Looking back to 1990, Thailand had the highest GDP growth rate in the ASEAN region at 11%, with an average growth rate of 8.7% from 1990 to 1995, while ASEAN had an average growth rate of 5.6%. However, after the Tom Yum Goong crisis, Thailand's economic growth began to decline and fell below many ASEAN countries. Over the past 10 years (2014 to 2023), Thailand's GDP grew by only 1.8%, while ASEAN experienced growth of over 3.7%.

Regarding monthly inflation, Thailand has been able to control it effectively, never reaching an inflation rate as high as 11% since the Tom Yum Goong crisis. In contrast, Indonesia and Vietnam faced inflation problems exceeding 80% in 1998 and over 28% in 2010, respectively. The Bank of Thailand predicts that the general inflation rate in 2024 may grow by only 0.4%, but will start to align with the target of 1.1% in 2025.

This low inflation rate, combined with tight lending practices and another interest rate cut by the US Federal Reserve in December 2024, leads to speculation that the Bank of Thailand may consider further interest rate reductions in the future, even after a cut in October 2024. Additionally, Thailand's household debt adjusted for seasonality in Q2 2024 remains high at 89.8% of GDP, with over 28% being non-performing loans. Data from the credit bureau indicates that non-performing loans as of September 2024 reached 1.2 trillion baht, a 14% increase compared to the same period last year. Changes in interest rates affect the direction of the Thai baht; if the baht depreciates, it will benefit the export sector as exporters will receive increased revenue from selling goods in foreign markets.

Dr. Nareen Chutijirawong, Executive Director of Clients & Markets, Deloitte Thailand, further notes that Switzerland is playing an increasingly important role as a market for Thai exports. According to data from the Trade Policy and Strategy Office of the Ministry of Commerce, in the first 10 months of 2024, Thailand exported over 3.6 billion US dollars to Switzerland, a 5% increase compared to the same period last year. Furthermore, Switzerland is likely to become Thailand's second-largest trading partner in Europe, while discussions on trade and investment cooperation between Thailand and Switzerland are ongoing within the framework of the Free Trade Agreement between Thailand and the European Free Trade Association (EFTA), which includes Switzerland.

Thatsada Saengmanacharoen, Senior Advisor, Clients & Markets, Deloitte Thailand, adds that the Trump 2.0 policy, which increases global trade risks, will be a significant factor that Thailand and exporters must closely monitor, as it may lead to increased import tariffs on goods from Thailand. In 2023, Thailand exported over 48 billion US dollars to the United States, accounting for about 17% of total exports, which increased to over 18% in the first 10 months of 2024. Therefore, such tax increases could significantly impact Thailand's exports and economy.

Deloitte believes that in the uncertain economic situation in Thailand, private consumption and tourism will remain the main drivers for GDP growth in 2025. Data from the Thailand Development Research Institute (TDRI) indicates that Thailand should develop new tourist attractions to align with the warming climate, as there is a risk of losing more than 60 billion baht annually due to the impacts of climate change. To address this challenge, promoting creative tourism, such as developing entertainment, museums, and indoor music, is crucial. Additionally, outdoor venues should be equipped with appropriate lighting and transportation to effectively adjust tourism times to avoid extreme heat.

Beyond the economic perspective, Deloitte summarizes the key challenges for businesses in 2025 as follows:

Supply Chain Volatility: Geopolitical tensions, climate issues, and resource shortages significantly impact business operations, necessitating flexible and adaptable practices, including the use of predictive technology to effectively mitigate risks.

Sustainability Pressures: Companies must balance profit with environmental responsibility to meet consumer demands and legal regulations, under increasing scrutiny from stakeholders.

Integration of AI and Development of New Skills for Labor: The adoption of advanced AI systems, alongside addressing bias, data privacy, and automation issues, requires a balance between human oversight and innovation. Rapid technological advancements necessitate significant upskilling of the workforce, creating capability gaps and challenges in retaining talent within organizations.

“The growth of Agentic AI represents a significant trend in the AI sector that promotes automated decision-making with clear objectives. Beyond content creation, these systems enhance work efficiency, foster innovation, and elevate collaboration between humans and machines. Agentic AI differs from Generative AI, which focuses on executing complex activities to achieve specific goals through machine learning and automation,”Dr. Nareen stated.

The application of Agentic AI encompasses customer service, manufacturing, sales, and healthcare, showcasing specialized expertise, innovation, and reliability. However, challenges remain in team coordination, trust calibration, and defining success metrics, which require clear objectives, effective team roles, and balanced oversight to unlock the transformative potential of Agentic AI while managing associated risks.

Read more about the Thai economic report at
https://www2.deloitte.com/th/en/pages/about-deloitte/articles/thailand-economic-outlook.html