Weak growth momentum in major economies supports accommodative policy stances. China is dealing with rising economic uncertainty.
US
Growing signs of U.S. economic slowdown raise prospects for a Fed cut in September. Consumer confidence index edged down to 97.4 in August, below the 2023–24 average of 105. Continuing jobless claims stood at 1.95 mn, a notable rise from 1.87 mn at the start of 2025. Home prices in June recorded their sharpest slowdown in nearly 13 years, while PCE inflation held steady at 2.6% YoY in July.
Overall, U.S. data continues to reflect an ongoing slowdown in the labor market, housing market, and consumer sentiment. Meanwhile, President Trump’s attempt to remove Lisa Cook—a voting member of the Fed’s policy committee—has raised concerns about the central bank’s independence and the U.S.’s credit credibility. At the same time, most of Trump’s tariff hikes have been ruled unlawful, but an appeals court has allowed the tariffs to remain in effect until October 14, giving Trump time to appeal to the Supreme Court. This underscores future uncertainty over the policy. Amid rising risks to the U.S. economy, Krungsri Research expects the Fed may deliver 2–3 more rate cuts by year-end.
Japan
With exports and manufacturing set to contract further and consumption remaining sluggish, the BOJ is likely to hold its policy rate at 0.5% through year-end. In July, Retail sales grew only 0.3% YoY, the slowest pace since February 2022. Tokyo’s headline inflation eased to 2.6% YoY in August from 2.9% in July, while Tokyo’s core inflation also slowed to 2.5% from 2.9%.
Japan’s economy continues to face low growth as exports and manufacturing tend to weaken under the pressure of higher U.S. tariffs, while domestic consumption has yet to recover. Inflation has been easing, driven by lower energy prices, electricity subsidies, and the release of rice stockpiles. These factors are expected to allow the BOJ to avoid tightening too quickly, even though inflation remains above its 2% target. Krungsri Research therefore maintains our view that the BOJ will likely keep its policy rate at 0.5% through year-end.
China
China is facing domestic fragility while external risks are rising. Industrial profits still contracted by -1.5% YoY in July, though easing from -4.3% in June. The Producer Price Index (PPI) has continued to decline for 34 straight months. Meanwhile, Mexico announced plans to impose tariffs on imports from China after continued pressure from the U.S.. New tariffs are expected to cover automobiles, textiles, and plastics.
The weakening economy could limit the effectiveness of policies to address excess supply and fierce price competition, which have weighed on corporate profits. Recently, the government has prepared to overhaul petrochemical production capacity by phasing out small plants, supporting the retrofitting of facilities over 20 years old, and shifting focus toward specialized chemicals. At the same time, Mexico’s planned tariff hikes under U.S. pressure signal growing risks, as the U.S. may urge other allies to further contain China’s global market influence. Under these multi-front risks, restoring confidence among Chinese households and businesses to stimulate domestic economic activity is both necessary and challenging.
Thailand’s economic momentum expected to weaken in the second half of 2025 due to domestic and external pressures.
Thai economy slows on weaker tourism and spending in July. Domestic political development remains in focus. The Bank of Thailand (BOT) reported that in July, the overall economy showed signs of slowing. While the number of international tourists rose (+2.0% MoM, sa), tourism receipts declined (-5.6%). At the same time, private consumption continued to weaken (-0.2%) due to contractions in services and non-durable goods spending. Private investment also turned to contract (-0.4%), driven by a decline in machinery and equipment. Meanwhile, merchandise exports excluding gold rose only slightly (+0.3%).
Thailand’s economy in the second half of 2025 is expected to face mounting pressures and a clear slowdown. Economic growth is projected to ease to just 1.3% in 2H25 from 3.0% in 1H25, under the assumption that political developments have only a limited impact on economic policy implementation. The main drag comes from weaker exports, as the effects of higher U.S. tariffs become more evident and the front-loaded export momentum fades. Meanwhile, the tourism sector continues to recover at a slow pace, weighed down by declining Chinese arrivals. Domestic political uncertainty also remains a key risk, following the Constitutional Court’s ruling on August 29 that removed Ms. Paetongtarn from the Prime Minister. If there is a significant delay in forming a government, it could undermine investor confidence, dampen domestic spending, and disrupt the continuity of key economic policies.
July exports rise in USD terms but post first baht-denominated decline in 8 months, signaling weaker growth momentum. The Ministry of Commerce (MOC) reported that Thailand’s exports in July stood at USD 28.6 bn, expanding 11.0% YoY. Excluding oil-related products and gold, exports grew by 16.6%. Key export items showing growth included computers and parts, hard disk drives, integrated circuits, as well as agricultural products—particularly fresh, chilled, frozen, and dried fruits, which rebounded sharply. Exports to major markets also performed well, led by shipments to the U.S., China, the European Union, and ASEAN. For the first seven months of 2025, export value reached USD 195.4 bn, up 14.4% YoY.
Thailand’s export outlook for the remainder of 2025 faces clear downside risks. Even though exports to the U.S. grew sharply by 30.1% in the first seven months of this year, the increase in U.S. tariffs on Thai goods from 10% to 19% effective August 7 is expected to significantly raise costs for exporters heavily reliant on this market. Moreover, the continued appreciation of the Thai baht adds further pressure, both by reducing export revenue in local currency terms and by eroding price competitiveness against regional peers. The latest data also shows that July export value in baht terms contracted for the first time in eight months by -1.1% YoY, underscoring the weakening role of exports as a key driver of Thailand’s economic growth going forward.