Thailand growth remains slow due to tariffs despite beating exports forecast

Thailand’s exports rose in July and beat expectations as buyers rushed orders ahead of new U.S. duties, the Commerce Ministry said on Monday.

Officials warned the pace would cool for the remaining part of 2025 now that the tariffs have taken effect. Customs data showed exports grew 11 percent in July from the previous year, topping a Reuters poll that put the rise at 9.6%, though the increase slowed from June’s 15.5%.

Over the initial seven months of 2025, shipments, a key engine of growth, were up 14.4 percent from a year before. The ministry kept its full-year projection for export rise at 2 percent to 3 percent, while noting the outcome could be higher because of the solid beginning. 

U.S. tariffs pull demand forward

Importers brought in goods earlier to avoid higher costs once the United States tariffs began, said Poonpong Naiyanapakorn, director of the Trade Policy and Strategy Office. “Achieving double-digit export growth for the year is unlikely,” he told a news briefing.

By destination, sales to the U.S, Thailand’s biggest market, rose 31.4 percent in July versus a year ago. Exports to China increased 23.1 percent, ministry figures showed.

Washington set a 19 percent tariff, a rate lower than the 36 percent previously announced and broadly matching levies on other regional exporters. There is still uncertainty over how the United States will treat goods transshipped through Thailand from 3rd countries, officials said.

The U.S was Thailand’s top buyer last year, taking 18.3 percent of total shipments worth $55 billion. Imports increased 5.1 percent in July compared with a year earlier, above a projected increase of 4.90 percent.

The trade balance swung to a surplus of  $0.32 billion in July, compared with an expected deficit of $0.5 billion.

Thailand’s economy slowed in the second quarter on weak demand

Thailand’s economy lost momentum in the April-June quarter as soft household spending offset firm export gains. Southeast Asia’s second-largest economy was expected to grow 2.5% year on year in Q2, according to an August 12-15 poll of 21 economists.

Individual forecasts ran from 1.6% to 2.9%. The economy expanded 3.1% in the first three months of 2025, and the government will publish the second-quarter release on August 18.

On a quarter-on-quarter, seasonally adjusted basis, gross domestic product was seen up 0.3%, a smaller sample of economists indicated, easing from 0.7% in Q1.

Exports posted double-digit increases in every month of the first half except April, as many firms hurried shipments ahead of higher U.S. tariffs. The United States was Thailand’s biggest export market last year, taking 18.3% of total shipments worth $55 billion.

To support domestic demand, the central bank on Wednesday lowered its key policy rate by 25 basis points to 1.50%, a three-year low. That marked the fourth cut in 10 months overall.

“We expect GDP growth to slow to 1.7% in the second half of 2025. Headwinds are piling up. Exports will slow as frontloading fades,” said Erica Tay, director of macro research at Maybank. A separate Reuters survey in July projected growth of 1.3% in Q3 and 0.9% in Q4.