Thailand’s economic adjustment strategies to address global economic decoupling

Abstract

          Since 2017, geopolitical tensions—particularly between the United States and China—have intensified economic decoupling, increasing structural risks for Thailand as an economy highly dependent on international trade and foreign direct investment. This research aims to   (1) examine global economic scenarios under economic decoupling, (2)  analyze  the impacts on Thai economy, with particular attention to trade structure, foreign direct investment, and global supply chain integration, and (3) propose adjustment strategies for Thailand at both policy and business levels.

The findings indicate that intensifying economic decoupling is likely to slow global and Thai economic growth through weaker exports and declining investment. Thai industries that are deeply integrated into global supply chains face rising production costs and increasing regulatory restrictions in international trade. Although some Thai firms have demonstrated readiness adaptive capability—such as diversifying export markets and upgrading toward higher value-added products—significant long-term challenges remain, particularly in accessing advanced technologies and high-skilled labor.

Thailand must urgently respond to these changes through two major policy directions. First, policies should support business adjustment and enhance national  economic potential. In this regard, the government should play a more proactive role in international trade negotiations and export market diversification, strengthen the competitiveness of firms and the workforce, promote investment in high-potential target industries, support firms in diversifying risks across global supply chains, and establish effective mechanisms for public-private communication. Second, Thailand should pursue national security policies by maintaining strategic neutrality while clearly defining  economic alignment in selected high-potential industries in order to prepare for scenarios in which  escalating global conflicts may intensify to the point that countries are increasingly compelled to take sides.