Thailand Monthly Thailand Economic MonitorEconomic Monthly Monitor 18 August 2025 Thailand’s economic recovery has been uneven. Stronger-than-expected exports and investment are masking weakness in tourism and private consumption. Export momentum benefited from front-loaded orders amid rising trade uncertainty, while approved investment projects in high-value sectors surged. Responding to persistently low inflation, BOT cut its policy rate further to 1.50 percent, a two-year low. On the fiscal side, the deficit widened as accelerated spending outpaced improved revenue collection. Meanwhile, the appreciation of the Thai baht on the back of improved external balances and returning capital inflows, signaled rising investor confidence. Exports and investment drove growth as consumption and Figure 1: Goods exports continued to grow as manufacturing weakened. In June, manufacturing production manufacturing production gradually improved (Index, Jan 2021 = 100) growth softened to 0.6 percent (year-on-year), down from 1.9 150.0 Manufacturing Production Index percent in May, despite goods exports and investment continuing Private Investment Index, SA Private Consumption Index to see strong expansion due to front-loaded orders (Fig. 1). 130.0 Goods Exports Service activity also weakened, reflecting a contraction in tourism and a slowdown in private consumption. The private consumption index grew by just 0.6 percent in June, as fiscal support 110.0 measures waned and consumer confidence declined. In contrast, private investment exceeded expectations, supported by strong 90.0 exports and foreign direct investment. Overall, in Q2, manufacturing production improved on the back of rising exports Source: Haver Analytics; CEIC; World Bank staff calculations. and investment, while private consumption softened. Figure 2: BOI’s investment promotion approval BOI-approved investment continued to surge in Q2, led by increased substantially in 2025 high-value sectors. Investment prospects in Thailand have (BOI approved application for FDI promotion, year-to-date, % of annual GDP) 6 strengthened in the first half of 2025, supported by a sharp rise Average of 2019-2021 2022 2023 2024 2025 in Board of Investment (BOI) promotion approvals, both in project 5 numbers and investment value (Fig. 2). From January to June 4 2025, BOI-approved projects surged 38 percent year-on-year to 3 1,880 projects, with total investment value soaring 138 percent to THB 1.06 trillion (5.7 percent of 2024 GDP). The increase was 2 driven by high-value-added industries, including digital, 1 electronics and electrical appliances, automotive and parts, 0 renewable energy, food processing, and petrochemicals. Notable Q1 Q2 Q3 Q4 projects include large-scale data centers, Japanese expansion Source: CEIC; World Bank staff calculations. into electric vehicle and pickup truck production, battery cell, supercapacitors, smart electrical appliances, smart electronics, Figure 3: Thai exports to major destinations expanded (Export growth, percent, year-on-year, 3 months moving average) semiconductor assembly and testing, and printed circuit board 40 EU27 ASEAN China United States (PCB) manufacturing. Total Goods exports surged in June, driven by front-loaded 20 orders. Goods exports rose 15.5 percent year-on-year in June— driven largely by front-loaded orders amid rising risks of trade 0 restrictions (Fig. 3). The expansion was supported by strong exports of food and agricultural products, electronics, electrical appliances, and machinery. Electronics exports benefited from -20 growing demand for data center components. In contrast, rice Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Source: Haver analytics; World Bank staff calculations. THAILAND MONTHLY ECONOMIC MONITOR | 1 Official Use Only exports declined sharply due to lower prices and volumes amid Figure 4: Tourism declined substantially in the past six rising global supply, weighing on farmers’ incomes. months (Tourist arrivals, Index 2019=100) 140 Thailand and the United States reached a new trade Total China ROW agreement on mixed tariffs and quotas. Effective August 7, a 120 19% tariff will apply to Thai exports to the U.S. In return, Thailand 100 will impose a 0% tariff on about 90% of U.S. imports, covering 80 products like those under Thailand’s FTAs with other countries. 60 Soybeans, corn, and pork will be tariff-free but subject to import 40 quotas, while tariffs on sensitive agricultural products—e.g. rice, 20 sugar, and processed fruits—will remain. The agreement also 0 includes commitments to increase imports of U.S. aircraft, crude Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Jul-25 oil, and LNG, and to reduce the bilateral trade imbalance by 70% Source: Haver analytics; CEIC; World Bank staff calculations. by 2030. In the short term, the government is preparing low- interest loans to support business liquidity and assist farmers Figure 5: Decline in Chinese arrivals was driven also by affected by the policy. Looking ahead, the focus will shift to changing travel preferences enhancing competitiveness, promoting higher value-added (Changes thousands) in average Chinese tourist arrivals in 2025 to date from 2024, in production, and creating jobs—particularly by localizing supply 300 chains and integrating SMEs into production networks. 200 100 Tourist arrivals continued to decline sharply, driven by 0 fewer visitors from China. In July, tourist arrivals declined by -100 15.9 percent—compared to the same period last year, reaching -200 79 percent of pre-pandemic levels. In the first seven months of -300 2025, the number of tourists fell by 6.4 percent from last year Japan Viet Nam Malaysia South Singapore Thailand (Fig 4). The drop was largely due to a 38.9 percent year-on-year Korea fall in Chinese visitors, marking the sixth consecutive monthly Note: data as of July for Thailand, Vietnam; June for Japan, Singapore, South Korea; as of April for Malaysia decline. This was driven by safety concerns, economic Source: CEIC; World Bank staff calculations. conditions, the appreciation of the Thai baht, and growing competition from destinations like Japan and Viet Nam (Fig 5). Figure 6: Thailand’s inflation rate remained negative (Percent Year-on-Year) Arrivals from other countries also began to decline in the past Indonesia Malaysia Philippines Thailand three months, especially ASEAN visitors. Vietnam 6.0 Persistently low inflation prompted the Bank of Thailand (BOT) to cut the policy rate to 1.50 percent. In July, headline inflation remained negative for the fourth consecutive month, 1.0 falling to -0.7 percent—the lowest rate among ASEAN peers and emerging markets (Fig. 6). The decline was driven by lower energy prices, reflecting both falling global oil prices and -4.0 continued government subsidies, including electricity price Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 Source: CEIC; World Bank staff calculations. reduction until at least August. Fresh food prices also fell, supported by increased supply from favorable weather. Core Figure 7: The fiscal balance shifted to a surplus in Q3 of inflation (excluding energy and fresh food) eased to 0.8 percent— FY 2025 the lowest in six months—as weakening domestic consumption (Central government fiscal balance, GFS basis, percent of GDP) 2.0 began to weigh on prices. Inflation has remained below the BOT’s target range (1–3 percent) for five consecutive months. On -3.0 August 14, the Monetary Policy Committee cut the policy rate by 2022 2023 2024 2025 25 basis points to 1.50 percent to provide accommodative -8.0 support for SMEs, vulnerable households, and businesses facing -13.0 mounting challenges. -18.0 Q1 (Oct-Dec) Q2 (Jan-Mar) Q3 (Apr-Jun) Q4 (Jul-Sep) Source: Haver analytics; World Bank staff calculations. THAILAND MONTHLY ECONOMIC MONITOR | 2 Official Use Only The fiscal deficit widened despite improved tax collection, Figure 8: The current account balance improved in June, as spending accelerated early in the fiscal year before driven by strong trade balance surplus (USD million) slowing in Q3. In the first nine months of FY 2025 (October- BOP: USD: Trade Balance June), the central government's fiscal deficit (GFS basis) 6000 BOP: USD: Services, Primary Income & Secondary Income widened to 3.7 percent of GDP, up from 3.0 percent in the same BOP: USD: Current Account Balance 4000 period last year, driven by higher current and capital spending between October 2024 and March 2025 (Fig. 7). From April to 2000 June 2025, expenditure declined due to the expiration of transfer 0 measures, although capital spending remained high. Fiscal revenue increased, supported by stronger personal income tax -2000 and VAT collections. Public debt reached 64.2 percent of GDP -4000 in July. -6000 Jan-22 Jan-23 Jan-24 Jan-25 The government’s new THB 157 billion (0.8 percent of GDP) Source: CEIC; World Bank staff calculations. fiscal stimulus package targets infrastructure and trade- affected firms. Of this, THB 115 billion (0.6 percent of GDP) will fund infrastructure projects, including nationwide water and transport systems. Another THB 18.5 billion (0.1 percent of GDP) will be used to boost business competitiveness— particularly for firms impacted by trade policies—and to provide student loans for 139,481 students. All funds must be disbursed by the end of FY2025 (September). Improved investor sentiment supported a rebound in capital inflows and the baht. In July, the baht NEER continued to appreciate by 0.6 percent from last month, reflecting a weaker U.S. dollar and an improved current account balance. This appreciation was in line with movements in the Malaysian and Singaporean NEERs. The current account shifted to a surplus of 5.6 percent of GDP in June, up from a 0.7 percent deficit in May (Fig. 8), supported by a strong goods trade surplus and a narrowing services deficit as the dividend season ended, reducing repatriation of foreign earnings. Portfolio inflows returned for the first time in three months, with net inflows of THB 13.5 billion in July (x percent of GDP), driven by equity investments. The Stock Exchange of Thailand index rose to its highest level since February, as investor confidence improved following expectations of positive news on trade policy. News Highlights: Issues to Watch: • Thai-US talks to clarify tariff rules (Bangkok Post, Link). • Trade: How will the global trade policy changes affect the • Thai consumer confidence slips further in July Thai economy? (Bangkok Post, Link). • Inflation: Will global oil price continue to fall together with • August marks a pivotal moment in Thai politics headline inflation in coming months? • Fiscal: Will the government be able to fully disburse the (Nation Thailand, Link). remaining THB 157 billion in fiscal stimulus funds within FY2025? Prepared by Warunthorn Puthong (Economist). For further questions, please email wputhong@worldbank.org THAILAND MONTHLY ECONOMIC MONITOR | 3 Official Use Only Selected Economic and Financial Indicators 2024 2024 2025 2025 Q3 Q4 Q1 Q2 Mar Apr May Jun Jul GDP and Inflation (%YoY) GDP growth (real) 2.5 3.0 3.3 3.1 Contribution to GDP growth: Private consumption 2.6 2.1 1.9 1.5 General Government consumption 0.4 1.0 0.8 0.4 Gross fixed capital formulation: Private -0.3 -0.5 -0.4 -0.2 Gross fixed capital formulation: Public 0.3 1.8 1.6 1.2 Net Exports of goods and services 1.3 0.2 2.4 7.0 Change in Inventory 0.0 -1.7 -2.7 -4.7 Residual and errors -1.7 0.1 -0.4 -2.2 GDP, nominal (USD Billion) 528 133 142 140 GDP, nominal (THB Billion) 18,583 4,616 4,823 4,744 Consumer Prices Index: Headline 0.4 1.0 1.0 1.1 -0.3 0.8 -0.2 -0.6 -0.3 -0.7 Consumer Prices Index: Core 0.6 0.4 0.8 0.9 -0.3 0.9 1.0 1.1 1.1 0.8 Output Indicators Manufacturing Production Index (%YoY) -1.2 -0.8 -1.7 -1.6 1.5 0.0 1.9 1.9 0.6 Capacity Utilisation (%) 59.0 58.8 57.7 61.0 59.1 64.0 56.6 61.0 59.6 Farm Production Index (%YoY) -1.0 0.1 0.3 4.5 3.5 7.3 6.3 4.3 0.0 Service Index (%YoY) 8.4 10.7 9.5 8.8 7.0 13.4 6.3 6.4 8.2 Labor Market Unemployed workers (Thousand Persons) 402.2 413.9 358.2 357.7 - Unemployment rate (%) 1.0 1.0 0.9 0.9 - Balance of Payments (USD million) Current account 11,336 2,328 4,481 11,082 584 1,782 -1,545 -312 2,442 Current account (% of GDP) 2.1 1.8 3.2 7.8 0.4 4.1 -3.5 -0.7 5.6 Trade Balance 19,274 5,773 5,351 8,174 5,288 3,405 -1,398 3,374 3,312 Exports of goods (%YoY) 23 8.9 10.6 15.0 15.0 17.7 9.9 18.5 16.1 Imports of goods (%YoY) 25 11.3 10.7 7.1 16.8 9.4 17.3 19.2 13.8 Service, primary and secondary Income -7,938 -3,445 -870 2,908 -4,704 -1,623 -147 -3,686 -870 Tourist Arrivals (Thousand Persons) 35,546 8,588 9,457 9,549 7,136 2,720 2,547 2,267 2,323 Financial account -14,891 551 -7964 -10059 - Financial account (% of GDP) -2.8 0.4 -5.6 -7.1 - Foreign direct Investment, net 1,962 -514 2,029 1,862 - Portfolio flows -19,977 -1,874 -10,557 -9,975 - Other Investments 2,287 2,286 119 -2,193 - Central Government Budget (Fiscal Year, THB billion)/2 Revenue 3,433 1,019 763 786 806 291 292 325 415 Expenditure 4,014 1,069 1,185 958 923 351 304 275 384 Central Government balance -581 -50 -422 -172 -117 -60 -12 49 30 Central Government balance (% of GDP) -3.1 -1.1 -8.7 -3.6 -2.4 Public debt (% of GDP) 63.2 63.2 63.8 64.6 64.2 64.6 64.8 65.1 64.2 Financial Markets Indicators Policy rate (%) 2.25 2.50 2.25 2.00 1.75 2.00 1.75 1.75 1.75 1.75 M2 (%YoY) 2.30 2.3 2.7 2.3 1.4 1.7 1.2 1.5 1.6 - Household Debt (% of GDP) 88.4 88.9 88.4 87.4 SET Index 1,400 1,449 1400 1158 1090 1,158 1,197 1,149 1,090 1,242 Thai government bond yield, 10-year (%) 2.25 2.47 2.25 2.06 1.61 2.06 1.88 1.78 1.61 1.48 Foreign exchange reserve 262 269 262 270 285 270 280 279 285 287 and FX forward position (USD billion) USD/THB, end of period 33.99 32.29 34.0 33.9 32.6 33.93 33.41 32.59 32.56 32.70 THB NEER, average 121.0 121.8 126.3 127.7 127.2 127.0 125.9 127.7 128.0 128.8 1/ Underemployment accounts for workers who are occupied less than 35 hours per week and are available for additional work (defined by BOT). 2/ Fiscal Year 2025 begins in October 2024 and ends in September 2025, Fiscal Balance according to GFS. Source: Office of the National Economic and Social Development Council, Bank of Thailand, Office of Industrial Economics, Ministry of Industry National Statistical Office of Thailand, Fiscal Policy Office, Public Debt Management Office, Haver Analytics. THAILAND MONTHLY ECONOMIC MONITOR | 4 Official Use Only