Thailand

Thai economy expected to remain sluggish

After its lacklustre performance in 2024, the challenges and risks facing Thailand’s economy suggest that the disappointing economic momentum is expected to continue in 2025 before stabilising at low level in 2026. Private consumption (59% of GDP) is set to slow further judging by the low consumer confidence amid persistently high household debt levels, uncertainty surrounding world trade, weak recovery in tourism and the reallocation of household stimulus measures (Digital Wallet and its cash transfers) in favour of support for ailing industries. The sharp rise in exports in the first half of 2025 mainly reflects front-loading activity to avoid US tariffs before the 90-day truce ends. With exports to the US accounting for almost 9% of GDP and reciprocal tariffs among the highest in the region (37%), Thailand is likely to be hit hard by these trade restrictions if fully implemented. Moreover, as Chinese exporters seek new markets amid US-China trade frictions and China's economic slowdown, competition for Thai companies is likely to increase. In addition, the persistent weakness of private investment is likely to accentuate the loss of competitiveness for domestic companies.

The recovery in tourism (12% of GDP in 2024 compared to 19% in 2019) is running out of steam, as the Chinese (14% of total visitors) are more reluctant to visit the country. While the numbers of European, Russian, and Indian tourists have increased, the uptrend has not been enough to offset the decline in the number of Chinese tourists (-33% year-on-year for the January-May 2025 period). The decline can be explained by increased competition from other countries in the region (notably Vietnam), the promotion of domestic tourism in China and heightened security concerns.

For the first time in 13 months, headline inflation turned negative in April 2025 amid lower global energy and food prices. Meanwhile, core inflation is positive but remains at low levels in a context of weak domestic demand and government price controls that mitigate supply-side price pressures. Against this backdrop, starting in October 2024, the Bank of Thailand (BOT) cut rates three times for a total of 75 basis points (as at June 2025), after raising them to a 10-year high of 2.5% in 2023. Given the weakening economic outlook, low inflationary pressures and the weak US dollar, the BOT may continue to cut rates in 2025.

Global economic weakness complicates fiscal policy

The budget deficit increased in fiscal year 2025 (October 2024 to September 2025) driven by households’ stimulus. It is expected to fall in FY 2026, mainly on the back of an increase in the tax base and a possible abandonment of some costly stimulus measures (Digital Wallet). The FY26 budget was passed at its first parliamentary reading and will go before Parliament for second and third readings in August 2025, which are due to be followed by Senate and royal approvals. The budget aims to stimulate Thailand's sluggish economy, for example by supporting SMEs with special loan programmes to provide working capital with low interest rates and deferred debt repayments. Conversely, the government has delayed phase three (for 16–20-year Thais) of the Digital Wallet cash handouts and is considering allocating this budget to alternative economic stimulus measures, including infrastructure stimulus or US tariffs mitigation. In the meantime, revenues could be bolstered by a possible increase in VAT and other tax reforms. But there is considerable uncertainty as to whether this budget will materialise, as Thailand's budget disbursement has historically been subject to delays, and this could continue amid bureaucratic bottlenecks and slow project approvals. Risks surrounding the increasing public debt-to-GDP ratio since the latter’s sharp rise during the pandemic are limited by the debt profile. Public debt is mostly long-term (88% of total at the end of April 2025) and is mainly denominated in local currency (99%).

The current account balance turned positive again in 2023 after two years in negative terrain, driven by the improvement in the balance of goods and services, which nevertheless remains well below pre-crisis levels (2015-2019) amid the sluggish recovery in global trade. Meanwhile, the primary income balance remains stable and negative due to payments of profits and dividends to foreign companies. The secondary balance is stable and positive, driven by remittances. Going forward, the slow recovery in tourism, slow growth in exports and higher imports (particularly from Chinese exporters seeking alternative markets to the US) owing to US trade restrictions, could hinder the recovery of the current account. Notwithstanding, international reserves remain high, covering around eight months of imports. The Thai baht (THB) strengthened against the backdrop of dollar weakness in the first half of 2025. The future path of the THB depends in part on US economic policy.

Fragile government coalition

The Move Forward party (MFP) won the largest number of Parliamentary seats in the May 2023 general election. But after months of political stalemate on back of the MFP's inability to form a government due to its push to amend the law on lèse-majesté, the Pheu-Thai Party (PT) announced the formation of an eleven-party coalition made up mainly of conservatives and army supporters. The coalition led to the appointment of Srettha Thavisin as Prime Minister. In August 2024, Thailand's Constitutional Court dismissed Prime Minister Srettha Thavisin for violating the constitution by appointing a former prisoner as minister. A week earlier, the same court had ordered the dissolution of MFP and banned its leaders from politics for 10 years for having proposed abolishing the crime of lèse-majesté in its 2023 campaign. MFP’s 143 remaining parliamentarians formed the People’s Party, led by Natthaphong Ruengpanyawut, which continues to push for progressive reforms. In September 2024, King Maha Vajiralongkorn approved new Prime Minister Paetongtarn Shinawatra's cabinet. Paetongtarn’s cabinet largely continues Srettha’s policies, as both operate under Pheu Thai’s populist framework. The political landscape is quite unstable given the large number of parties that make up the coalition, and weakens it despite its large majority of 325 out of 495 seats in the lower house. In addition, Thaksin Shinawatra, the father of the current Paetongtarn and a former Prime Minister himself (2001-2006), is accused of having an influence on his daughter's government. He is the subject of ongoing legal investigations, raising questions about Pheu Thai's ability to govern without interference from the military and conservative elites.

Geopolitically, Thailand strives to maintain its neutral position to attract foreign investment and tourists from all over the world. Thailand is negotiating a trade agreement with the EU has been a candidate for OECD membership since June 2024 after having signed an enhanced cooperation programme in 2018. It is also a member of the US-led Indo-Pacific Economic Framework for Prosperity (IPEF) and officially became a BRICS partner country on 1 January 2025.

Payment

Credit transfer is the main form of payment used by large companies in Thailand. The majority of credit transfers are made electronically and the popularity of this payment method is growing as clearing systems have become more developed.

Cheques are still a popular form of cashless payment in terms of value. They are used by companies and consumers to make a wide range of payments. Post-dated cheques are a common mean of short-term credit.

Although cash remains the dominant payment method in Thailand, telegraphic transfer of money is increasing its popularity along with the cashless trend accelerated by COVID-19.

Debt Collection

Amicable phase

According to the 2015 debt collection Act BE 2558 (AD 2015), the debtor is an individual person or personal guarantor. The Act was created to regulate collection activities carried out by creditors, or by collection agencies in cases of consumer debt. Commercial debt collection houses are also expected to follow the practices set out within the Act. For example, during the amicable phase, creditors can only communicate with the debtor or other persons as authorised by debtor. Creditors or collection agencies are also limited to identifying themselves with the details of debt to the debtor.

Legal proceedings

Thailand’s Judicial Court System comprises three levels: the Supreme Court: this is the highest court authority in the country. All of its decisions are final and must be executed. It hears appeals and contests against decisions made by the Courts of Appeal, Regional Courts of Appeals and Courts of First Instance; Courts of Appeal: these are divided into Courts of Appeal and Regional Courts of Appeal. Both handle appeals against the decisions or orders made by the lower courts; Courts of First Instance: these lower courts comprise the courts in Bangkok, courts in provinces, specialised courts and juvenile and family courts.

A preliminary stage of legal action can be conducted if there is failure to reach an amicable settlement with the debtor. This phase includes communications, negotiations, meetings with debtors, letters of demand and notifying the police in cases where there is a criminal penalty.

The Civil Mediation before Litigation

Recent amendments to Thailand’s Civil Procedure Code in 2020 and already applied since November 2020 will allow parties to submit a matter for court-supervised mediation prior to the actual filing of the case. Encouraging mediation prior to filing a complaint is intended to save time and resources that would otherwise be expended on a trial. The meditation processes introduced by the new act are not subject to any court fees, exempting the postal fee in delivering the letter to the debtor.

Prior to filing a complaint, one of the parties in a dispute may petition the appropriate court to appoint a mediator to resolve the dispute. If the petition is accepted, and the opposing party consents to the mediation, the court will bring the parties together (with or without their lawyers) and appoint the mediator. If the mediation yields a successful settlement, the court will consider to: Arrange a compromise agreement and assuming it is fair, made in good faith, and in accordance with both the law and the parties. In case if any parties breached the agreement, they are still able to bring the case to ordinary lawsuit process. Or, the parties may agree and request the court to issue a judgment in accordance with the compromise agreement with mutually agreed by the parties. If the court agrees that it is necessary, it will issue the judgment accordingly. The judgment would be enforced if the debtor has failed to do so, leading to the execution process at the end.

The court’s judgment is considered final and can only be appealed if there is an allegation of fraud against any party to the case, or if the judgment is alleged to go against either the agreement or a provision of law involving public order.

If, on the other hand, the mediation is unsuccessful, any limitation period that was either barred after the submission of the petition or will be barred soon will be extended for 60 days from the end of the mediation. After that, the creditor still has a right to file the case into the lawsuit as an ordinary proceeding.

Ordinary proceedings

If the debtor fails to comply with demand notices, the creditor can file a claim with the Court, depending on the value of the debt: If the debt does not exceed THB 300,000 (Thai baht), the complaint must be lodged at the District or Provincial Court; if the debt exceeds THB 300,000, the complaint must be filed at the Civil or Provincial Court.

Court policy is to screen unnecessary cases from court trial. Most Civil Courts have mediation centres for parties to negotiate and compromise on an arrangement. Once a case has been decided amicably, a compromise agreement is prepared and the court passes judgment in accordance. Each of the parties is responsible for documenting evidence and the burden of proof associated with their case. A judgement is made once the court has considered and weighed the evidence presented by both parties.

The time frame for proceedings with the Court of First Instance can take between one to three years.

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Enforcement of a Legal Decision

If the debtor fails to comply with a domestic judgment, the creditor is entitled to apply for the execution of the judgment. This can involve the issuance of an execution decree, delivery of an execution decree to the debtor, issuance of a writ of execution and the seizure and sale of property belonging to the debtor.

Thailand has no reciprocal recognition and enforcement agreements with other countries. Enforcing foreign judgments requires new legal proceedings, where the evidence will be considered and legal defence made available to both parties.

One exception is that Thailand is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1985). International arbitration awards by member countries of the Convention can be enforced if they are already final.

Insolvency Proceedings

Thailand has legislation on bankruptcy and reorganisation proceedings (Bankruptcy Act BE 2483). (Latest amendment in 2018, B.E. 2561)

REORGANISATION PROCEEDINGS

Limited Companies, Public Limited Companies and Financial Institutions (Large Enterprises)

A petition can be filed against an insolvent corporate debtor who owes one or more creditors a known sum of THB 10 million (USD 333,000) or more. Once the court has accepted the petition for further proceedings, it appoints a planner to prepare and submit a reorganisation plan to the official receiver within three months. The court may extend this period up to a maximum of two times, for one month from the publication date of the court order appointing the planner. Secured and unsecured creditors must then apply for payment of debts within one month from the date of publication of the order for appointment of the planner. Once the official receiver is in possession of the reorganisation plan, he will convene a meeting with the creditors to consider the proposal. If it is accepted, the court needs to approve it and confirm the appointment of the plan’s administrator. The latter is then responsible for the debtor company’s reorganisation, as set out within the plan.

SMEs registered with the Office of SME Promotions or other government agencies for conducting business

Petition can be filed against: insolvent individuals who owe one or more creditors a known sum of THB 1 million or more; insolvent limited partnerships, registered partnerships, non-registered partnerships, groups of persons or other juristic entities who owe one or more creditors a known sum of THB 3 million or more; insolvent private limited companies owing one or more creditors a known sum of between THB 3 million and 10 million.

In cases such as these, the petitioner should file a petition, along with a proposed plan of not more than three years in length in execution.

BANKRUPTCY PROCEEDINGS

A creditor can file a bankruptcy petition against a debtor if the latter is insolvent and owes one or more creditors a definitive sum of over THB 1 million (if the debtor is an individual), or owes more than THB 2 million (if the debtor is a legal entity).

Once a petition for bankruptcy has been filed, the proceedings normally include hearing the witnesses, temporary receivership of the debtor’s property, the appointment of an official receiver, filing of claims for debt payments by creditors within two months from the publication date of the permanent receivership order, a bankruptcy order against the debtor (if no agreement can be reached with the creditors, issuance of a permanent receivership order, seizure of property, sale of property by public auction and pro rata distribution of the sale proceeds to creditors.

Last updated: December 2025