Thai economic and investment landscape under Trump 2.0

The global economy in the first quarter of 2025 will be shaped by three themes: US economic resilience, China’s strategic pivot, and escalating economic tensions following Donald Trump’s return to the White House.
Despite showing signs of strength, the US economy exhibits some vulnerabilities. While employment growth has slowed significantly, the Federal Reserve’s Beige Book signals a broader economic deceleration. We expect the Fed to make four interest rate cuts in 2025, potentially bringing the federal funds rate down to 3.4% by year-end.
The International Monetary Fund projects increased trade barriers under the Trump administration could slow global economic growth by 0.1 to 0.8 percentage points in 2025, intensifying to 0.2 to 1.2 points in 2026.
However, we expect Trump’s policies, if they materialise, will be implemented gradually, considering their potential impact on American consumers through higher import prices.
Turning to China, Beijing since late September has shifted from a “cautious” to a “stimulus” mode, driven by three factors: addressing a severe economic slowdown; preparing for Trumponomics 2.0; and preventing a further stock market decline.
The comprehensive stimulus package introduced by Chinese authorities includes: monetary policy easing, an 800-billion-yuan liquidity injection to support the stock market, local government debt management assistance, consumption stimulus in five major cities, and extensive property sector support.
MIXED SIGNALS IN THAILAND
In Thailand, the economy exhibited resilience in the third quarter, with GDP growth reaching 3.0% year-on-year, surpassing market expectations of 2.7% and accelerating from 2.2% in the previous quarter. Key growth drivers included public investment with robust growth of 25.9% as government budget disbursement increased. This component alone contributed 1.8 percentage points to overall GDP growth.
Yet net exports showed mixed signals, growing at a rate of 10.5%, up from 4.7% in the previous quarter, though their contribution to GDP growth moderated to 1.0% from 2.5% because of higher imports. The surge in imports, particularly raw materials and intermediate goods, suggests increasing market penetration by Chinese products.
Looking ahead, we are concerned that Thailand’s economy will face major challenges from global economic headwinds and trade tensions. There are signs of a slowdown in major trading partners that portend an uncertain recovery in key export markets.
Moreover, the impact of Trump’s trade policies could lead to more protectionist measures worldwide. Coupled with the impact of Chinese dumping, this could create significant downside risk for Thai exports going forward.
Nevertheless, we expect two more interest rate cuts by the Bank of Thailand and an increase in government budget disbursement. This may lead to a domestic consumption recovery, which could counter the risk of external headwinds.
In terms of investment strategy, investors are advised to prioritise domestic consumption plays and defensive growth sectors such as telecom, tourism, healthcare and retail.
We like companies that have earnings growth, with domestic consumption increasing, that are backed by economic stimulus and are defensive by nature. On this basis, our top picks for the first quarter of 2025 are ADVANC, AOT, BCH, CPALL and HMPRO.
Dr Piyasak Manason heads the Investment Strategy Department, INVX-Research Group, at InnovestX Securities