Monthly Economic Bulletin (October 2025)

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Monthly Economic Bulletin (October 2025)

16 October 2025

By Macroeconomic Team

Global: Horizon through the fog — navigating a slowing economy as tariff impact spreads and political risks rise

IMF expects dim global growth prospects, projecting a slowdown to 3.2% in 2025 and 3.1% in 2026, with risks skewed to the downside amid fading front-loading, prolonged uncertainty, and rising protectionism.

Global growth is slowing, led by weaker manufacturing in core countries; tariff effects have intensified following August hikes, with further drag anticipate

U.S.: Economic momentum falters amid government shutdowns and employment weakness; Fed expected to cut rates further, but inflation concern could temper pace

Eurozone: France political risk and Germany’s stimulus delay add to growth pressure, but ECB turns cautious on inflation

Japan: Economic momentum remains fragile, political uncertainty has risen after Komeito Party ended its long-standing coalition with Liberal Democratic Party

China: Economy struggles to gain traction, weighed down by lingering structural headwinds and mounting external pressures; recovery hinges on policy support

Thailand: Eyes on the horizon — short-term measures lift prospects, but longer-term path remains uncertain

In the fourth quarter of 2025, a clearer political environment and government stimulus measures are expected to support domestic demand, while weak global trade and tariff impacts may continue to cap growth momentum.
Thai exports slowed sharply in August, weighed down by higher U.S. tariffs and weaker global demand, though full-year growth may exceed our forecast due to front-loaded shipments. The stronger baht has also pressured exporters, with shipments in baht terms contracting for the second consecutive month.
Tourism recovery remains sluggish despite the high season in the fourth quarter. Full-year arrivals may fall short of our projection.
However, public spending is likely to pick up in early FY2026, supporting growth momentum.
Private consumption is expected to improve in 4Q25, supported by upcoming stimulus measures, though tailwinds from short-term measures to boost domestic spending may be offset by headwinds from weaker-than-expected foreign tourist arrivals.
Improving political clarity is helping to lift business sentiment, but private investment outlook continues to be weighed down by external headwinds and weak domestic demand.
Headline inflation remains in negative territory and is expected to hover around zero for the full year.
Given the anemic outlook and persistent downside risks, the MPC may cut the policy rate twice by the first half of 2026.

Krungsri Research Forecasts for 2025

Key factors in 4Q25: Clearer political situation and stimulus measures expected to support domestic demand, but weak global trade and tariff impacts may cap growth momentum

Thai exports slowed sharply after 19% U.S. tariff took effect in August; full-year growth may exceed forecast on front-loaded shipments

Stronger baht also pressures exporters as shipments in baht terms fall for a second month

In the first eight months of 2025, Thai exports grew 13.3% YoY, according to the Ministry of Commerce. The growth has been led by industrial products (+17.5%, including computers and components, integrated circuits, and electrical appliances) and agro-industrial products (+4.1%, such as pet food, fresh/chilled/frozen and processed chicken, and sugar). However, agricultural exports edged down by 0.4%, mainly due to a decline in rice shipments. Thai exports to the U.S. slowed markedly after the U.S. imposed a 19% import tariff, effective August 7. In addition, the appreciation of the baht in August further pressured exporters’ earnings. Thai exports in baht terms contracted for the second consecutive month, reflecting the weakening momentum of Thailand’s export sector in the second half of the year.

Tourism recovery remains sluggish despite the high season in the fourth quarter; full-year arrivals may fall short of our projection

In September 2025, Thailand welcomed 2.24 mn foreign visitors, down from 2.58 mn in August and a decline of -11.3% YoY. Chinese arrivals continued to decline by -39%, falling to second rank behind Malaysia, while tourism revenue totaled THB 99.4 bn, contracting by -5.8%. During the first nine months of 2025, total foreign arrivals reached 24.12 mn (-7.6% YoY), generating THB 1.11 trn in revenue (-5.9%). The top source markets were Malaysia, China, and India. Looking ahead to the final quarter, although the period marks the tourism high season, challenges persist due to the slower-than-expected recovery of Chinese visitors and intensified competition from regional destinations. As a result, achieving our full-year forecast of 34 mn foreign arrivals remains increasingly challenging.

Key economic policies of the new government under the 4-month administration

Public spending is likely to pick up in early FY2026, supporting growth momentum

In the final quarter of FY2025 (July–September), disbursement of the current budget increased by 5.7% YoY, while capital expenditure contracted by -5.2% YoY, reflecting delays in some public investment projects. For the full FY2025 (October 2024 to September 2025), current budget disbursement rose by 3.3% YoY to THB 2.92 trn, accounting for 105% of the annual allocation. Capital expenditure disbursement also increased significantly by 21.5% YoY to THB 0.54 trn, but it represented only 56% of the annual allocation target. The new government has announced a plan to accelerate the disbursement of the central budget totaling THB 66 bn to stimulate the economy during the transition between FY2025 and FY2026. The measures focus on supporting household spending and assisting vulnerable groups, which are expected to help support domestic consumption in the short term.

Private consumption weakened in 3Q25 but is expected to pick up in 4Q25, supported by upcoming stimulus measures

In August, the Private Consumption Index (PCI) was broadly unchanged from the previous month, reflecting fragile household spending amid persistently low consumer confidence. Nevertheless, private consumption is expected to gradually recover in the final quarter of the year, supported by short-term government measures such as cost-of-living relief for low-income households, the “Co-payment Plus” scheme, and domestic tourism promotion. However, the pace of recovery is likely to remain limited due to (i) the impact of U.S. tariff measures, which may pressure export income and employment, (ii) declining agricultural incomes in line with weaker farm prices, and (iii) structural constraints from high household debt, which continue to weigh on household spending going forward.

Tailwinds from short-term measures to boost domestic spending may be offset by headwinds from weaker-than-expected foreign tourist arrivals

Before the implementation of short-term spending stimulus measures, the government had projected that Thailand’s GDP growth in 4Q25 would slow to around 0.3% YoY, down from an estimated 1.7% in 3Q25, as momentum from exports and private consumption began to weaken. However, the introduction of short-term stimulus programs — including the “Co-payment Plus”, or “Half-half Plus” scheme and additional assistance for State Welfare Card holders — is expected to inject more than THB 100 bn into the economy in the final quarter of the year. This policy impulse should help support household spending and lift GDP growth in 4Q25 by an additional 0.3–0.4 percentage points above the earlier projection. In addition, the government will introduce measures to promote domestic tourism, with a particular focus on secondary cities.
Krungsri Research views that, since these measures are mostly funded under the FY2025-2026 budget already included in our baseline projection, the net additional boost will likely come from higher household spending of about THB 40 bn (0.1–0.2% of GDP), providing a modest upside to growth outlook. However, this upside could be offset if foreign tourist arrivals miss our projection in the final quarter of 2025.

Private investment: Political clarity lifts sentiment, but external headwinds weigh on outlook

In August, the Private Investment Index (PII) expanded by 9.2% YoY but declined by -0.2% MoM after seasonal adjustment, reflecting pressures from continued contraction in manufacturing production and persistently low-capacity utilization. Nevertheless, clearer domestic political conditions have helped bolster business sentiment, while the government has accelerated economic stimulus measures and is preparing to expedite actual investment, supported by a sharp increase in BOI-approved investment applications. Although private investment shows partial signs of recovery, its near-term outlook remains pressured by several factors, including (i) global economic uncertainty weighing on demand for goods, (ii) the impact of U.S. trade tariffs, and (iii) a slow recovery in the tourism sector.

Headline inflation remains in negative territory, expected to hover near zero for the full year

Policy interest rate: Anemic outlook and persistent risks may prompt MPC to cut policy rate twice by the first half of 2026

Monthly Economic Bulletin (September 2025)

Announced :18 September 2025

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Monthly Economic Bulletin (October 2025)

เศรษฐกิจมหภาค

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