Weekly Economic Review

Macroeconomic

Weekly Economic Review

21 October 2025

By Macroeconomic Team

Global & Thai Economy

The longer the trade war lasts, the more it harms the global economy. In Thailand, tourism sector remains weak this year.

Trade War

Simmering trade tensions heighten risks to the global economy. On October 10, Trump announced plans to impose a 100% tariff on China starting November 1, along with software export curbs. The move followed China’s decision to expand export controls on rare earths, lithium-ion batteries, and the machinery and technology used to produce such goods, which are set to take effect during November-December. Both nations also imposed additional port fees on each other beginning October 14. Moreover, Trump threatened to suspend cooking oil imports in retaliation for China’s decision to shift its soybean purchases from the U.S. to South American countries. However, toward the end of last week, Trump appeared to soften his stance, noting that a 100% tariff on China would not be sustainable. Meanwhile, the U.S. Treasury Secretary signaled that the existing trade truce may be extended if China delays its export control measures on rare earths.

Krungsri Research believes the recent U.S. plan to increase tariffs on China is being used as a “threat” to secure a trade deal that favors the U.S., as evidenced by the U.S. decision to provide tariff reductions for the EU in exchange for the EU’s commitment to increase investment in the U.S. and energy imports worth USD 600 bn and USD 750 bn, respectively, by 2028. China is also aware of U.S. intentions. In September, China proposed to expand its investments in the U.S. on the condition that the U.S. ease its scrutiny of Chinese investment and exempt tariffs on raw materials imported by Chinese firms for production in the U.S. However, as long as both sides are unable to reach a trade agreement, China’s export controls on rare earths (for which it accounts for 70% of global supply) and on lithium-ion batteries, together with higher port fees, will raise production costs and may disrupt manufacturing processes across global supply chains. As a result, the longer protectionism continues and the more it expands, the greater its impact on the global trade and economy.

Global

In 2026, global economy would continue to slow down, with world trade to weaken significantly amid rising risks. The International Monetary Fund (IMF) projects global GDP growth to slow from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026. Growth in 2025 will partly benefit from a temporary boost in trade activities due to front-loading effects, as firms have accelerated exports ahead of tariff increases.

However, global growth would slow further in 2026 as the gains from front-loading fade, while downside risks continue to mount. Key risks include: (i) impacts of higher tariffs and trade protectionism in various forms; (ii) inflation concerns, which could constrain the pace of monetary policy easing; and (iii) political uncertainty and geopolitical tensions in several countries. Meanwhile, the World Trade Organization (WTO) expects global merchandise trade volume to expand by only 0.5% in 2026 — significantly below its previous forecast of 1.8% and down from 2.4% in 2025. These risks are likely to weigh on manufacturing and trade activities, further dampening the overall global economic outlook.

Weekly Economic Review

Thailand

Thai government plans to boost domestic tourism but foreign tourist arrivals may be weaker than expected. In September, foreign tourist arrivals totaled 2.24 mn (-11.3% YoY), generating THB 99.4 bn in tourism revenue (-5.8%). For the first nine months of the year, foreign arrivals stood at 24.1 mn (-7.6% YoY), with total tourism revenue of THB 1.11 trn (-5.9%).

Amid subdued tourism and domestic spending, the government is rolling out new measures to stimulate domestic travel in late 2025. The plan includes: (i) a personal income tax deduction of up to THB 20,000 for domestic travel expenses between October 29 and December 15, with deductions of 1 time for travel to major cities and 1.5 times for travel to secondary cities; (ii) expediting seminars and events organized by government agencies and state enterprises to accelerate budget disbursement; and (iii) offering double tax deductions for hotel and accommodation renovations in secondary cities to improve local tourism infrastructure. These measures should help support domestic demand and partially offset the impact of slower foreign tourist arrivals. However, Krungsri Research assesses that total foreign tourist arrivals in 2025 could fall short of our expectation of 34 mn amid weak Chinese tourist demand and intensifying competition within the regional tourism market.

Weekly Economic Review

Announced :21 October 2025

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Weekly Economic Review

Macroeconomic