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Thailand: Economic growth in the fourth quarter – hope or illusion?
Bank of Thailand's Piti Disyatat forecasts positive economic recovery in the fourth quarter of 2025, despite fluctuations in inflation.
Thailand: Economic growth in the fourth quarter – hope or illusion?
There's fresh news in Thailand! Bank of Thailand (BOT) Deputy Governor Piti Disyatat sees light at the end of the economic tunnel and forecasts positive economic growth for the fourth quarter of 2025. According to current key data provided by marketscreener.com, an annual growth rate of 2.2% is expected for 2025.
After a mixed development, however, it can be seen that the economy shrank by 0.6% in the third quarter of 2024 - the first time in over eleven quarters that the numbers slipped into negative territory. For 2026, however, the BOT already has more optimistic predictions: growth of 2.3% could await us.
Inflation and interest rate policy under observation
The economic situation goes hand in hand with inflation rates. Piti expects headline inflation to return to positive territory by March or April 2025, after being negative for the eighth consecutive month in November 2024. According to a Reuters survey, an inflation rate of minus 0.34% is expected for December 2024. The BOT estimates that inflation will be negative 0.1% in 2025, followed by a slight increase to 0.3% in 2026.
To support the economy, the BOT cut the key interest rate to 1.25% in December 2024, a total of 125 basis points since October 2024. Market participants expect that there could be another interest rate cut in February 2025. However, Piti emphasizes the need to be careful with these measures to avoid unwanted shocks.
The baht and gold market in focus
In addition, the Thai baht appreciated by 8% in 2025, making it the second strongest currency in Asia. This strength has its pitfalls: The baht's volatility is influenced by various factors such as US tariffs, high household debt and political uncertainties. The BOT plans to intervene in the foreign exchange market in the second half of 2025 to control volatility without targeting specific levels.
Another hot topic seems to be gold trading. The BOT expects large merchant transactions to account for as much as 50% of Thailand's GDP in 2025. Gold prices rose a remarkable 64% in 2025 - the biggest increase in 46 years! However, traders are warning about a plan by the Ministry of Finance to introduce a tax on online gold transactions. Such measures could jeopardize Thailand's attractiveness as a gold trading center.
The background to these considerations is the effort to promote gold trading in US dollars in order to mitigate the impact on the baht. According to forecasts, the price of gold could even reach $5,000 per ounce in 2026.