InnovestX warns of worst-case scenario as reciprocal duties loom
Thailand’s economy faces a significant hit if U.S. President Donald Trump moves ahead with sweeping reciprocal tariffs on Wednesday, according to InnovestX Securities. The brokerage warns that GDP growth could fall from 2.5% to just 1.3% in a worst-case scenario, with Bank of Thailand’s expected rate cut offering little relief.
Thailand is reportedly on Trump’s so-called “Dirty 15” list of trade partners facing higher tariffs. While the average U.S. tariff on Thai goods is currently 2%, Thailand imposes an average tariff of 8% on American products.
Piyasak Manason, head of economic research at InnovestX, outlined four scenarios in which U.S. tariffs could vary from stable rates to increases above 10%:
- 40% probability: No change in tariffs; GDP growth remains at 2.4-2.5%
- 30% probability: Tariffs rise to 6%; GDP drops to 2%
- 20% probability: Tariffs reach 10%; GDP falls to 1.7%
- 10% probability: Tariffs exceed 10%; GDP plunges to 1.3%
“In the worst case, the central bank’s policy rate cut will be ineffective due to the scale of the economic shock,” said Piyasak. Thailand’s 29% export exposure to the U.S. leaves it especially vulnerable — higher than Malaysia’s 26% but below Vietnam’s 47%.
Stagflation fears and sector-specific risks
Piyasak warned of a looming period of mild stagflation — stagnant growth combined with persistent inflation. He also projected that the U.S. Federal Reserve may only implement a single 0.25% rate cut in 2025 due to mounting policy challenges.
Krungsri Securities identified Thailand’s automobile, agriculture, and electronics sectors as the most exposed to retaliatory tariffs, given their higher import tariffs on U.S. goods. InnovestX, meanwhile, slashed its 2025 SET Index target to 1,350, down from 1,550.
Investment guidance and short-term shocks
InnovestX advises investors to diversify across regions and focus on defensive sectors with resilient domestic earnings, while also tapping into growth segments like AI and clean energy abroad.
Separately, the March 28 earthquake is expected to deliver a short-term blow to Thailand’s tourism sector, with revenue losses estimated at 10–15% over a two-week period. However, a recovery is anticipated within a month.
