Thailand Monthly Thailand Economic MonitorEconomic Monthly Monitor 25 September 2025 Thailand’s economic momentum softened in Q2 2025 with growth lagging behind regional peers due to weak private consumption and tourism. High-frequency data confirmed this softening trend, with a slowdown in manufacturing and a continued drop in tourist numbers. However, investment and goods exports shored up the economy. On the policy front, the government remains committed to an expansionary fiscal stance, evidenced by a widening deficit, a larger FY2026 budget, and plans for additional stimulus. Inflation remained negative, creating room for potential monetary policy easing. The baht continued to appreciate amid a strong trade surplus and portfolio inflows. Thailand’s economy continued to expand in Q2 2025, though Figure 1: GDP growth slowed in Q2 due to falling momentum softened amid weaker consumption and contribution from net exports and private consumption services exports. The latest GDP release shows a continued (Contribution to GDP growth, percent, year-on-year) expansion at 2.8 percent year-on-year in Q2 2025, slowing from Private consumption Public consumption Investment Net exports 3.2 percent in Q1 (Fig. 1). Growth remained the slowest among 12.0% Change in stocks* GDP, %YoY ASEAN peers. Goods exports benefited from front-loaded 8.0% shipments and stronger global demand for electronics, which also 4.0% supported private investment. Public investment rose with the 0.0% resumption of infrastructure projects. In contrast, private -4.0% consumption slowed sharply amid tighter credit, household deleveraging, and the fading impact of cash transfers, while -8.0% service exports weakened as tourist arrivals declined. -12.0% 1Q22 1Q23 1Q24 1Q25 Source: NESDC; World Bank staff calculations. High-frequency indicators suggest slowing activity, due to weak tourism and manufacturing production. In July, Figure 2: Manufacturing and services contracted (Percent, year-on-year) manufacturing production growth contracted by 4.0 percent 25.0 Manufacturing Production Index, SA (year-on-year), the first contraction in five months, driven by Service Production Index Private Consumption Index temporary closure of oil refineries for maintenance and Goods Exports contracting automobile production (Fig. 2). Services also weakened, as tourism contracted and private consumption 5.0 slowed. In contrast, private investment and goods exports continued to expand. Tourist arrivals continued to contract, driven mainly by -15.0Jan-23 Jan-24 Jan-25 falling arrivals from China and ASEAN. Tourist arrivals Source: Haver analytics; World Bank staff calculations. continued to decline, falling by 12.8 percent in July from a year earlier, reaching 75 percent of pre-pandemic levels (Fig 3). Over Figure 3: Tourist arrivals from major countries declined the first eight months of 2025, arrivals declined 7.2 percent year- (Tourist arrivals, Index 2019=100) on-year. The drop was driven mainly by fewer visitors from China 150 Total China ASEAN ROW and ASEAN amid safety concerns, global economic uncertainty, baht appreciation, and rising competition from Japan and Viet Nam. In contrast, arrivals from India and Europe continued to 100 grow. 50 Merchandise exports rebounded in July, boosted by front- loaded orders and stronger demand for electronics. Goods 0 exports rose 11.0 percent year-on-year in July— driven largely Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Jul-25 by front-loaded orders ahead of the U.S. tariff hike effective Source: Haver analytics; CEIC; World Bank staff calculations. THAILAND MONTHLY ECONOMIC MONITOR | 1 Official Use Only August 7 (Fig. 4). Growth was supported by strong shipments of Figure 4: Goods exports growth was driven by strong electronics, auto parts, and machinery, benefiting from rising electronics, automotive, machinery and gold exports (Export growth, percent, year-on-year, 3 months moving average) demand for data center components and pre-tariff orders. 20 Agricultural and agro-manufacturing exports also contributed, 15 led by fresh fruits and frozen foods, while rice exports declined. 10 The fiscal deficit widened in FY2025 as higher spending 5 outpaced revenue gains. In the first ten months of FY 2025 0 (October-July), the central government's fiscal deficit (GFS basis) -5 widened to 3.4 percent of GDP, up from 2.8 percent a year earlier Oct-24 Jan-25 Apr-25 Jul-25 but still below pre-pandemic levels (Fig. 5). The larger deficit Others Machinery & Equipment Non-monetary gold Automotive reflected higher current and capital spending, partly due to Electronics Agro-Manufacturing Agriculture Total Exports, Custom accelerated capital budget execution earlier in the fiscal year. Source: Haver analytics; World Bank staff calculations. Revenues also rose, supported by stronger income tax and VAT collections. Excise revenue increased as higher fuel tax receipts Figure 5: The fiscal deficit widened in the first 10 from the removal of tax cuts more than offset weaker collections months of FY 2025 (Central government fiscal balance, GFS basis, percent of GDP, Oct-July) from auto vehicles. 30 Revenue 0.0 Expenditures Fiscal balance, RHS The new cabinet’s fiscal stimulus could potentially support Fiscal balance, FY17-19 avg -2.0 growth but will bring public debt closer to the ceiling. The 20 -2.8 FY2026 budget sets spending at THB 3.78 trillion, a 0.7 percent -3.4 increase from FY2025, with a planned deficit of THB 860 billion -4.1 -4.0 (4.4 percent of GDP), slightly below last year’s 4.6 percent (Table 10 1). The new Anutin Charnvirakul cabinet announced a four- -6.3 -6.0 pronged strategy covering economic relief for households and farmers, border security, natural disaster response, and social 0 -7.6 -8.0 issues such as drugs, human trafficking, scams, and illegal 10M FY21 10M FY22 10M FY23 10M FY24 10M FY25 gambling. On economic relief, measures include reviving the Source: Haver analytics; World Bank staff calculations. Khon La Khrueng (co-payment) scheme, cutting electric train Figure 6: Inflation remained the lowest among ASEAN fares by 30–40 percent, and offering debt relief for farmers. Public (Percent) Indonesia Malaysia debt under the new budget is projected to rise to 67.3 percent of Philippines Thailand GDP, from 64.5 percent currently, approaching the 70 percent Vietnam ceiling. 6.0 Inflation remained persistently negative, reinforcing policy space for monetary easing amid rising SME stress. In August, 1.0 headline inflation remained negative for the fifth consecutive month, falling to -0.8 percent—the lowest rate among ASEAN -4.0 peers and emerging markets (Fig. 6). The decline reflected lower Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 energy prices from falling global oil prices and ongoing Source: CEIC; World Bank staff calculations. government subsidies. Electricity tariffs were cut further to THB Figure 7: Thai baht NEER appreciated in line with the 3.94 per unit for September–December, down from THB 3.99 in Malaysian ringgit NEER May–August and the lowest since 2022. Fresh food prices also (Index 2020 =100) eased on favorable harvests. Core inflation dropped to an eight- 105 month low of 0.81 percent as weakening domestic demand weighed on prices. Inflation has remained below the BOT’s 1–3 100 percent target for five months, leaving room for accommodative monetary policy at a time when SMEs face mounting challenges 95 and credit quality is deteriorating, with the NPL ratio rising to 2.8 90 percent, led by SME loans. 85 The baht continued to appreciate in early September while Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 equity markets rallied on expectations of fresh fiscal IDR MYR PHP THB stimulus under the new government. The baht NEER Source: CEIC; World Bank staff calculations. THAILAND MONTHLY ECONOMIC MONITOR | 2 Official Use Only appreciated by 0.9 percent in the first week of September, the Figure 8: Government bond yields declined across strongest gain among Asian peers, reflecting a weaker U.S. maturities (Percent) dollar, an improved current account, and inflows to the bond 3.5 markets (Fig. 7). The current account surplus rose to 4.8 percent 3.0 of GDP in July, supported by a strong goods trade surplus. 2.5 Portfolio inflows into government bonds have been significant 2.0 since the start of the year, driving yields lower across maturities 1.5 in line with expectations of low inflation, slowing growth, and 1.0 monetary easing (Fig. 8). Meanwhile, the Stock Exchange of 0.5 0.0 Thailand index climbed to a five-month high in the first week of September on investor expectations of fresh fiscal stimulus following the appointment of the new cabinet. Government Bond Yield: 2 Years Government Bond Yield: 5 Years Government Bond Yield: 10 Years Policy Interest Rate Source: CEIC; World Bank staff calculations. Table 1: Fiscal budget and Medium-Term Fiscal Forecast Budget Structure Actual Fiscal budget and Medium-Term Fiscal Forecast (THB million) FY2024 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 2,796,928 2,787,000 2,887,000 2,920,600 3,096,400 3,244,100 3,389,700 Total Revenues [15.2] [15.1] [15.3] [14.8] [15.1] [15.2] [15.3] 3,542,397 3,480,000 3,752,700 3,780,600 3,855,000 3,966,000 4,093,000 Total Expenditures [19.3] [18.9] [19.9] [19.2] [18.8] [18.6] [18.5] -745,469 2,540,469 2,704,575 2,652,301 Fiscal Surplus/Deficit [-4.1] [13.8] [14.3] [13.5] Public Debt (PDMO projection) 63.2 65.7 65.6 67.3 68.5 69.2 69.3 News Highlights: Issues to Watch: • The government of Anutin Charnvirakul’s policy design focuses on • Trade: How will the global trade policy quick-win plan (Nationthailand, Link). changes affect the Thai economy? • Thai PM to tackle baht strength as currency soars (Bangkok Post, • Inflation: Will global oil price continue to fall Link). together with headline inflation in coming • FPO suggests co-payment scheme design to account for areas months? • Fiscal: Can the new government’s stimulus and income levels (Bangkok Post, Link). plans boost growth? 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 Apr May Jun Jul Aug 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) 18583 4,616 4,823 4,744 Consumer Prices Index: Headline 0.4 1.0 1.0 1.1 -0.3 -0.2 -0.6 -0.3 -0.7 -0.8 Consumer Prices Index: Core 0.6 0.4 0.8 0.9 -0.3 1.0 1.1 1.1 0.8 0.8 Output Indicators Manufacturing Production Index (%YoY) -1.2 -0.8 -1.7 -1.6 1.4 1.9 1.9 0.4 -4.0 Capacity Utilisation (%) 59.0 58.8 57.7 61.0 59.0 56.7 61.0 59.5 57.4 Farm Production Index (%YoY) 0.5 2.2 0.0 6.2 5.9 7.3 0.9 9.5 7.8 Service Index (%YoY) 8.5 10.7 9.6 8.7 6.4 7.3 6.2 5.8 0.2 Labor Market Unemployed workers (Thousand Persons) 402.2 413.9 358.2 357.7 365.5 Unemployment rate (%) 1.0 1.0 0.9 0.9 0.9 Balance of Payments (USD million) Current account 11,336 2,328 4,481 11,082 584 -1,545 -312 2,442 2,214 Current account (% of GDP) 2.1 1.8 3.2 7.8 0.4 -3.4 -0.7 5.2 4.8 Trade Balance 19,274 5,773 5,351 8,174 5,288 -1,398 3,374 3,312 2,514 Exports of goods (%YoY) 23 8.9 10.6 15.0 15.0 9.9 18.4 16.1 9.7 Imports of goods (%YoY) 25 11.3 10.7 7.1 16.8 17.3 19.2 13.8 4.5 Service, primary and secondary Income -7,994 -3,444 -928 2,908 -4,704 -147 -3,686 -870 -300 Tourist Arrivals (Thousand Persons) 35,546 8,588 9,457 9,549 7,136 2,547 2,267 2,323 2,610 Financial account -14,891 550.9 -7964.3 -10059.3 - 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 1,019 763 786 806 292 327 414 273 Expenditure 4,014 1,069 1,185 958 923 304 276 385 290 Central Government balance -581 -50 -422 -172 -117 -12 51 30 -17 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 64.5 64.3 64.8 65.1 64.3 64.5 Financial Markets Indicators Policy rate (%) 2.25 2.50 2.25 2.00 1.75 1.75 1.75 1.75 1.75 1.50 M2 (%YoY) 2.30 2.3 2.7 2.3 1.4 1.2 1.5 1.6 1.9 - Household Debt (% of GDP) 88.4 88.9 88.4 87.4 SET Index 1,400 1,449 1400 1158 1090 1,197 1,149 1,090 1,242 1,237 Thai government bond yield, 10-year (%) 2.25 2.47 2.25 2.06 1.61 1.88 1.78 1.61 1.48 1.29 Foreign exchange reserve 262 269 262 270 285 280 279 285 284 290 and FX forward position (USD billion) USD/THB, end of period 33.99 32.29 34.0 33.9 32.6 33.41 32.59 32.56 32.70 32.31 THB NEER, average 121.0 121.8 126.3 127.7 127.2 125.9 127.7 128.0 128.8 129.2 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