Thailand is growing rapidly – ​​but thousands of businesses have closed

Thailand is reporting its fastest GDP growth in over two years, driven largely by tourism and strong foreign investment. At the same time, more than 2000 Thai businesses have been forced to close this year alone. How is this connected?

Thailand's economy is recovering at record speed
Thailand is emerging from the economic shadow of the pandemic – at least according to official statistics. In the first quarter of 2025, the country’s GDP is expected to grow by 3,4%, the highest quarterly growth in more than 2,5 years. The government points to increased domestic consumption, a strong tourism boom and a strengthening baht currency as the main reasons for the success.

Many small businesses are closing down
Behind the positive figures lies another reality – for many smaller companies the year has started tough. According to statistics from Thailand's Department of Business Development 2218 companies were forced to close their operations in the first two months of the year. At the same time, the number of newly registered companies has decreased, which worries economists.

“It’s a two-pronged recovery. Large companies and international investments are booming, but small businesses, especially in traditional trade and services, are being squeezed hard,” says an analyst at Bangkok Bank.

Foreign investments are increasing sharply
While small businesses struggle with tough conditions, foreign direct investment has increased sharply. In January and February 2025, a 68% increase was noted compared to the previous year. Several large technology companies have launched billion-dollar projects in Thailand – including data centers, cloud services and industrial parks. This strengthens the country's position as a digital hub in Southeast Asia.

The government sees this as a clear sign of confidence from global investors.

How can growth and bankruptcy occur simultaneously?
It is not unusual for an economy to grow while companies go bankrupt – especially in times of structural change. In Thailand's case, experts highlight several possible explanations:

• Global uncertaintyTrade tensions and signals of new US tariffs (Trump 2.0) have affected export-dependent businesses.
• Higher competitionE-commerce is growing rapidly, putting pressure on smaller stores and service companies.
• Distribution problemGrowth is concentrated in urban areas like Bangkok, while rural areas have not recovered at the same rate.

Future prospects for companies and investors
Despite the warning signs, many are optimistic. The government has announced support programs for small businesses and a new digital wallet for young people, which could stimulate consumption. Tourism is back on a broad front, and tech investments continue to grow.

Thailand thus faces both opportunities and challenges. For foreign investors and companies, the situation is interesting: there is good potential – but also a need to understand the underlying economic contrasts that now characterize the country.

Text: The editorial staff

Image license: Peter Hellberg, Flickr, original image