Economic and Monetary Conditions Report – May 2025

The Thai economy weakened as the service sector experienced a slowdown, despite a rise in merchandise exports and growth in short-haul tourism. Major challenges include trade policies, tourism trends, and geopolitical tensions.

Summary

• The Thai economy softened slightly from the previous month, due to a slowdown in the service sector and manufacturing production, while merchandise exports increased.
• The tourism sector experienced a decline in both revenue and number of foreign tourists, particularly long-haul travelers. However, short-haul tourists from countries such as China, Malaysia, and Japan increased.
• Merchandise exports rose significantly, driven by continued global demand for electronics used in data centers and accelerated shipments of products such as agricultural products and electrical appliances during the reciprocal tariff suspension period (grace period).
• The automotive sector has shown signs of recovery, particularly in passenger cars, with improvements in production and domestic sales.
• Key issues to monitor: 1) trade policies of major economies, 2) developments in the tourism sector, 3) business adaptation amid rising competition and shifting consumer behavior, and 4) geopolitical tensions and domestic risk factors.

The Thai economy softened slightly from the previous month due to a slowdown in activity across manufacturing, trade, and tourism sectors. Manufacturing production declined, attributed to prior inventory replenishment and the temporary closure of an oil refinery for maintenance. Tourism receipts dropped, primarily due to a decline in long-haul travelers, who typically have higher spending per trip.

Private investment dropped after accelerating in the previous month. Private consumption remained stable, supported by a continued surge in consumption of durables, although consumption of services declined. Merchandise exports rose sharply, led by electronics exports driven by increasing global demand and accelerated shipments during the grace period. Government spending contracted in both current and capital expenditures, reflecting a high base effect from last year following accelerated disbursement after the enactment of the Budget Act, B.E. 2567.

On the economic stability front, headline inflation turned slightly more negative than previous month, due to lower fresh food prices. Energy inflation remained negative, similar to the previous month. However, core inflation continued to rise in tandem with higher prepared food prices. The current account deficit narrowed, supported by a return to trade surplus.

Meanwhile, the services, income, and transfers balance registered a larger deficit due to seasonal profit repatriation by foreign businesses. The overall labor market improved, primarily driven by increased employment in the manufacturing sector.

Source : https://www.bot.or.th/en/news-and-media/news/news-20250630-2.html