Weekly Economic Review

Macroeconomic

Weekly Economic Review

4 November 2025

By Macroeconomic Team

U.S.–China trade deal eases short-term uncertainty. Japan’s economy shows early signs of recovery under more aggressive fiscal policy

US

Fed signals lower chance of a December rate cut while the latest U.S.–China trade talks ease short-term tensions. The Fed voted 10–2 to cut its policy rate by 25bps to 3.75%–4.00%, and announced plans to end Quantitative Tightening (QT) on December 1. Meanwhile, U.S.–China trade negotiations ended positively, as Trump announced an immediate reduction in tariffs on Chinese goods from 57% to 47% in exchange for China’s commitments to resume purchases of U.S. soybeans, keep rare earth exports flowing, and crack down on illegal fentanyl trade.

This trade deal has helped reduce short-term uncertainty. Meanwhile, recent comments from Fed Chair Jerome Powell — expressing concern about inflation and the lack of economic data due to the government shutdown — have increased uncertainty over a potential December rate cut. Nevertheless, given signs of a slowing U.S. economy, reflected in weaker employment data and subdued consumption, coupled with risks from the prolonged government shutdown, there remains room for further easing. Krungsri Research expects the Fed to deliver one more 25 bps rate cut by year-end, bringing the policy rate down to 3.50%–3.75%.

Weekly Economic Review

Japan

Proactive fiscal policy and new trade deal with the U.S. may support Japan’s economic recovery. The BOJ voted 7–2 to maintain its policy rate at 0.50%, citing economic risks and uncertainty surrounding U.S. tariff measures. Prime Minister Sanae Takaichi signed a trade and rare earth minerals agreement with the U.S., covering tax cooperation, transport, and investment, along with a pledge for Japan to allocate over USD 550 bn to U.S.-related projects. However, details of the agreement remain limited.

Japan’s fiscal stimulus package, worth JPY 13.9 trillion, is expected to boost consumption and economic growth toward the end of the year. The measures focus on supporting households and businesses, addressing inflation, promoting investment in technology, infrastructure, and national security, and mitigating the impact of import tariffs. In addition, the recent trade deal with the U.S. could ease some pressure on Japan’s export and manufacturing sectors. Considering these factors, along with inflation remaining above the 2% target, Krungsri Research assesses that the BOJ may raise its policy rate by early 2026.

Weekly Economic Review

China

Trade tensions have eased but trade protectionism and structural issues still weigh on China’s economy. The manufacturing PMI hit its lowest level in half a year, from 49.8 in September to 49 in October. Industrial profits accelerated from 0.9% YoY in the first eight months to 3.2% in the first nine months. Meanwhile, China and the U.S. reached a temporary trade deal. The U.S. will cut import tariffs on China by 10% for one year and suspend certain export controls and its probe into China’s shipbuilding industry. In return, China will suspend rare earth export controls and other retaliatory measures for one year and resume soybean imports from the U.S.

The manufacturing sector has slowed for seven straight months, reflecting its fundamental weakness despite stimulus measures. Meanwhile, recovery in industrial profits remains unclear and under pressure from excess supply and fierce price competition. In addition, despite a temporary trade truce, import tariffs remain high. Together with other trade barriers, these factors are expected to continue weighing on China’s exports and manufacturing. Looking ahead, transshipment tariffs and the technology war deserve close attention, as they could affect both China’s and the global economy.

Weekly Economic Review

Despite growing exports, Thai economy is expected to contract in 3Q25. Full-year GDP growth projected at 2.1%

Economic conditions improved in September, supported by exports and tourism, but overall activity in 3Q25 slowed from the previous quarter. The Bank of Thailand (BOT) reported that in September, export value excluding gold rose by 0.9% MoM sa, driven by higher shipments in electronics and automobiles. Meanwhile, both foreign tourist arrivals and tourism receipts increased by 5.8% and 12.6% MoM sa, respectively. However, domestic spending weakened in September, with private consumption contracting by -0.8%, mainly due to lower spending in the services category. Private investment also declined by -4.5%, primarily from lower investment in machinery and equipment.

In the third quarter, the Thai economy slowed from the previous quarter due to weakening domestic demand. Private consumption contracted following lower household income and declining consumer confidence, while private investment continued to fall, indicating cautious business sentiment amid domestic political uncertainty. The tourism sector showed only a slow recovery, with Chinese arrivals still below pre-pandemic levels. However, exports remained a key growth driver, despite some pressure from U.S. tariff measures. Krungsri Research estimates that Thailand’s GDP in 3Q25 likely contracted by -0.3% QoQ sa or grew by only 1.4% YoY (compared to +0.6% QoQ sa. and +2.8% YoY in 2Q25). Looking ahead, government stimulus measures — particularly the “Half-Half Plus Copayment” and “Tourism Tax Incentive” schemes — are expected to boost household spending and service activities in the final quarter, which could help the economy return to positive growth and avoid a technical recession. For the full year 2025, Krungsri Research maintains GDP growth forecast at 2.1%.

Weekly Economic Review

Although September export growth reached a 42-month high, several export sectors still contracted. The Ministry of Commerce reported that September exports expanded by 19% YoY to USD 31.0 bn. Excluding oil-related products and gold, exports grew 15.7%. Key products showing strong growth included computers and parts, fax machines, telephones and components, automobiles and parts, and integrated circuits. In contrast, agricultural exports continued to contract, particularly rice, rubber, and cassava. Exports to major markets such as the U.S., China, the EU, Japan, and ASEAN all recorded an expansion. For the first nine months of 2025, total exports grew by 13.9% to USD 254.1 bn.

Although September exports posted strong growth, the expansion remained concentrated in a few industries, particularly the electronics sector, which benefited from front-loaded shipments ahead of the U.S. tariff hikes on semiconductors, as well as from an expansion of the global digital technology industry. Meanwhile, agricultural and agro-industrial exports continued to contract, pressured by falling global commodity prices, intensified price competition within the region, and the impact of U.S. tariff hikes. Thai exports for the rest of this year may lose some momentum as front-loading effects fade, though stronger-than-expected performance in the first nine months of 2025 would lift full-year export growth above Krungsri Research’s earlier forecast of 3.5%. Nevertheless, the recent export expansion is not broad-based, with growth concentrated in specific sectors. This suggests that positive spillovers to the broader economy remain limited and may not be sufficient to offset weak domestic demand.

Weekly Economic Review

Announced :04 November 2025

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Weekly Economic Review

Macroeconomic