Discussions at the World Economic Forum this year were dominated by risks that pose a threat to global economic growth. "State-induced conflict" was identified as the top concern by participants, followed by "disinformation" and "misinformation", and "environmental concerns" such as extreme weather, loss of biodiversity and ecosystem collapse.
Needless to say, the world is entering an era of heightened economic tension and unimaginable fragmentation, resulting in more complex and uncertainties in global trade.
According to the World Bank's estimates, the Thai economy is expected to grow by 2.9% this year -- thanks to domestic factors that include the recovery of the tourism sector. About 40 million people are expected to visit the kingdom this year, up from 35.3 million in 2024.
However, exports -- another major source of revenue -- are expected to slightly drop this year, due to lower demand from major markets, such as China and the United States.
As such, the country has some work to do if it wants to be more competitive in the world stage and reach this year's economic growth target.
The World Bank's recommendations are listed down in report, Thailand Economic Monitor 2025, which focuses on ways to unlock the growth potential of small- and medium-sized enterprises (SMEs) and startups -- key drivers of the Thai economy.
The report listed four key recommendations, namely: increase access to financial resources, develop a new business support infrastructure, upgrade the workforce's skill and capabilities, and improve regulations and overall business environment.
Chris Bratley, senior partner at McKinsey & Company, in his speech at the 50th anniversary of MFC Asset Management on March 14, said Thailand (as well as Asean in general), need to change its economic structure to make it more competitive in new industries.
He noted Asean is rarely involved in the development of new industries, with Asean companies accounting for less than 1% of the players in the field.
A research on the next big arena of competition by McKinsey, published in October 2024, outlined 18 new industries that will emerge as major battlegrounds by 2040, which include semiconductors, digital economic growth, artificial intelligence (AI), electric vehicles (EVs), unmanned vehicles, batteries and nuclear power.
Several countries in the region have made some inroads in some of these sectors. Thailand, for instance, is becoming a hub for the production of EVs. Indonesia is building Asia's first battery plant, while Vietnam is investing in semiconductor production.
The Office of the US' Trade Representative (USTR) is expected to announce an expanded list of countries which have trade barriers and surpluses with the US, and Thailand is likely to be on the list.
Although the US has yet to slap Thailand with tariffs to fix the trade imbalance, there are concerns about how much room the government has to negotiate with Washington. This uncertainty will affect Thailand's economy this year, especially in the second half of the year, when the impact of such tariffs will start to become more evident.
In the negotiations with the US, Thailand will be urged to open its markets to US exports, such as motorcycles, cars, and agricultural products including pork, corn, soybeans, wine and beer.
The terms are still open for discussion, and Thailand has successfully done this in the past. In 1993, then-Commerce Minister Uthai Pimchaichon, sent a delegation to Washington to negotiate patents on drugs and music copyrights. To reach the deal, Thailand had to open up its market to US cigarette exports.
Amid the uncertainties and volatility in the global economy, only negotiation, not retaliation, can prevent an economic recession.
Ronyoot Chitradon, is Honorary Adviser for the Senate Committee on Economy, Finance and Fiscal policies.
