Thailand’s Economic Challenge in 2025: Lavaron Sangsnit on Revenue Shortfall and GDP Concerns

The looming fiscal storm clouding the skies of Thailand’s economic landscape for 2025 seems to be quite the conundrum for financial wizards. Finance Permanent Secretary Lavaron Sangsnit, presumably wearing his most pensive tie, has announced a rather troubling forecast. It appears that revenue collection for the government’s fiscal year 2025 is likely to miss its target, mirroring the unpredictability of today’s modern economy. From the outset of October 2024 stretching through to May 2025, net revenue sat at a somewhat impressive 1.7 trillion baht. While this figure sounds grand, it lurks a minor, pesky shortfall of 12.7 billion baht, a mere 0.7% shy of their envisioned target. Still, there’s a silver lining; this amount delightfully glistens with a 1.7% increase compared to the same period from the previous year—optimists, rejoice!

The Finance Ministry remains valiant in its quest to navigate the choppy fiscal seas towards their beacon of hope, a target set at 2.88 trillion baht for fiscal 2025. Yet, the economic growth that was once anticipated to gallop between a juicy 4% to 5% now stumbles around what might be a modest trot below 2%. Despite these less-than-ideal circumstances, Mr. Sangsnit reassures us with the notion that if revenue falls short, the treasury reserves, akin to a checked trove of hidden treasures, can be rummaged through to fill the fiscal void. As of June 17, the treasury balance heroically stood at a vast 338 billion baht, ready to leap into action if needed.

A hefty chunk of the government’s revenue takes its roots from the diligent workers of the Revenue Department. All eyes will be on them in August, as midsummer’s eager corporate taxes come pouring in, giving us a fresh glimpse into the thriving… or perhaps, thrashing, business sector. “The economy isn’t doing well—one can practically feel it in the air like an ominous storm front,” Lavaron muses, his attention seemingly drawn to the bespectacled scribbles of SET-listed companies’ earnings reports. These entities, mostly large corporations, form the bulwark of the Revenue Department’s clientele. Worryingly, tax collections here have undershot their target by a slim 0.6% in the first eight months of the fiscal year, with a tax collection goal ambitiously set at 2.37 trillion baht for fiscal 2025.

Lavaron shares his anxieties about the GDP growth teetering nearly 3% below target, casting shadows of doubt over tax collection aspirations. The Fiscal Policy Office, churning its analytical gears in May, had already adjusted their lenses to foresee economic growth skulking between 1.6% and 2.6% for the year—a step down attributed to global trade ebbs, influenced by the brouhaha of U.S. import tariffs and economic dips among Thailand’s trading partners.

The National Economic and Social Development Council (NESDC), not to be outdone, trimmed its own growth forecast down to 1.8% from an earlier blush of 2.8%, flagging the fraught effects of global trade tangles. Anchoring this revised figure are government stimulus efforts attempting to paddle against the economic tide. Entering 2025 with its sails somewhat squared, the economy showcased a growth of 3.1% year-on-year in Q1, a whispering scuffle compared to the prior quarter’s 3.3% growth, maneuvering a delicate enlargement by 0.7% from Q4 2024.

Exports have paraded forward with a prideful 12.3% climb in Q1, up from 11.5%—a surge largely driven by the eager importation of goods in anticipation of U.S. tariffs. However, the state planning unit, peering through their crystal ball, has ominously warned of upcoming slowdowns within the export and investment sectors as we head into Q2—the economic winds certainly seem to be shifting.