Key Takeaways
- Global growth slowing to 3.2% in 2025, 3.1% in 2026
- Thailand faces 1.8% GDP growth in 2025, fiscal risks mounting
- China’s economy slows to 4.8% growth with investment contraction
- Selective investment strategy recommended for Thai markets
As 2025 approaches its end, the global economy faces significant headwinds with slowing growth and persistent uncertainties. The International Monetary Fund projects global expansion of just 3.2% this year and 3.1% in 2026, marking a clear deceleration from 2024’s 3.3% performance.
China’s economic slowdown represents a major concern, with third-quarter GDP growth of 4.8% being the weakest in a year. More alarmingly, fixed-asset investment contracted 0.5% in the first nine months, reflecting declining confidence amid real estate challenges and US trade tensions.
Thailand’s Economic Challenges
Thailand confronts particularly difficult conditions as it heads toward 2026. The economy is expected to grow only 1.8% in 2025 and slow further to 1.4% next year, with the fourth quarter potentially seeing expansion below 1%.
Two critical risks demand immediate government attention under Prime Minister Anutin Charnvirakul:
Currency Volatility: The baht has swung dramatically, appreciating 4.5% since January to trade around 32.70 per dollar, creating uncertainty for trade and investment.
Fiscal Pressure: Fitch Ratings downgraded Thailand’s outlook to negative in September, following Moody’s similar move in April. Only S&P maintains a stable view.
The fiscal situation shows clear strain with public debt at 65.4% of GDP, nearing the critical 70% threshold. Revenue collection growth has slowed to just 1.2% annually from 3.2% previously.
Historical patterns suggest a 50% chance of actual credit rating downgrade within 1-2 years after negative outlook adjustments.
Government Response and Stimulus Measures
Finance Minister Ekniti Nitithanprapas has launched a comprehensive economic revival plan focusing on four key dimensions. The “Khon La Khrueng Plus” programme aims to inject 88 billion baht into the economy, potentially adding 0.2% to GDP growth.
Combined with enhanced welfare card funding and tourism promotion, the stimulus package could boost 2025 GDP by 0.2-0.3%, particularly in the fourth quarter.
However, implementation faces constraints including the four-month timeframe before parliament dissolution and challenges of a minority government.
Investment Strategy Recommendations
Given the economic outlook, a “selective buy” approach is recommended for Thai equities. The SET index may trade in a range of 1,270-1,320 points without new supporting factors.
Core Investment Themes:
- Earnings Play Stocks: ADVANC (subscriber growth, 5G), BCPG (renewable energy), GULF (power generation), SCC (construction materials)
- Quality Dividend Stocks: PTT and TTB offering at least 2% yield for defensive positioning
Trading Opportunities:
- Baht-Weakness Beneficiaries: Exporters like TU, GFPT, KCE, HANA in food and electronics
- Trade Tension Plays: Industrial estate developers WHA, AMATA, FTREIT attracting manufacturers leaving China
- Stimulus Recipients: Retailers CPALL, CPAXT, BJC; flood-related stocks TASCO, HMPRO; tourism and construction sectors
Dr Piyasak Manason heads the Investment Strategy Department, INVX-Research Group, at InnovestX Securities
