Weekly Economic Review

Macroeconomic

Weekly Economic Review

11 November 2025

By Macroeconomic Team

U.S. slowdown strengthens case for a rate cut by year-end. Japan’s recovery gains momentum. China steps up efforts to tackle structural issues

US

Senates vote to end Government Shutdown but weak economic data strengthen prospects for a Fed rate cut by year-end. Although the services PMI expanded to an 8-month high of 52.4 in October, the manufacturing PMI contracted for the eighth consecutive month at 48.7. Meanwhile, job cuts surged to 153,000 in October — the highest in 22 years — bringing the total layoffs this year to 1.1 million. In addition, consumer confidence dropped to a 3-year low of 50.3 in November.

The U.S. Senate approved a preliminary agreement to end the Government Shutdown, allowing the government to operate through the end of January 2026. However, the bill still requires approval from the House of Representatives and President Donald Trump’s signature before it take effect and officially end the Shutdown. Meanwhile, private-sector reports indicate further economic slowdown, as reflected by the further contraction in manufacturing PMI and the sharp rise in layoffs. Given these conditions, the Fed is expected to cut its policy rate by another 25bps to 3.50–3.75% at its December 9–10 meeting.

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Japan

BOJ likely to raise rates by early 2026 as economy shows signs of recovery amid inflation above 2%. In September, household spending expanded for the fifth consecutive month, rising 1.8% YoY, though slower than 2.3% in August. Although the manufacturing PMI fell to the lowest since March 2024 at 48.2 in October, the services PMI continued to expand at 53.1.

Although manufacturing remains weak, and household consumption is pressured by high inflation, services activity and business confidence remain strong. Furthermore, government stimulus measures — including efforts to curb inflation, promote investment, and cushion the impact of U.S. tariffs — are expected to support an economic recovery later this year and into 2026. Exports and manufacturing could be hit by U.S. tariffs, but Japan may face less impact than other countries since the average tariff on Japanese goods is 15%, lower than that imposed on most of other countries. If Japan’s economy recovers as expected amid inflation remaining above the 2% target, we expect the BOJ to raise its policy rate by early 2026.

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China

Chinese government accelerates its efforts to address ongoing structural problems. Headline inflation remained below 1% YoY for more than 30 consecutive months in October. The Producer Price Index (PPI) improved from -2.3% in September to -2.1% in October, the smallest decline since August 2024. Meanwhile, new home sales in October saw the sharpest drop since April 2024, at -41.9% YoY. Exports also contracted for the first time since February, at -1.1%.

Although U.S.-China trade tensions have begun to ease, Chinese economy remains under pressure from several structural challenges, including excess supply in the manufacturing and real estate sectors, as well as a declining population. At present, the government is focusing more on addressing these issues, including mitigating intense price competition and oversupply, expanding social welfare (e.g., subsidies for newborns), and establishing new agencies to manage government debt. In addition, it continues to promote the development of industries expected to drive future economic growth, known as “New Quality Productive Forces.” Despite positive signs, we expect these measures will take time and require consistent implementation to yield concrete results.

Weekly Economic Review

Inflation likely to turn negative this year. BOT may cut policy rate at final meeting of 2025. Tourism recovery remains slow

October inflation remained negative for the seventh consecutive month. MPC is expected to cut policy rate to 1.25% at its December meeting. Headline inflation stood at -0.76% YoY in October, remaining in negative territory since April. The decline was mainly driven by lower prices in the energy, electricity, and fresh food categories. Meanwhile, core inflation (excluding raw food and energy) eased slightly to 0.61% from 0.65% in September. For the first ten months of 2025, average headline and core inflation stood at -0.09% and 0.87%, respectively.

Headline inflation may remain in negative territory for the rest of the year, mainly due to: (i) Dubai crude oil prices staying below last year’s levels; (ii) Government measures to ease living costs, including reductions in electricity fees (Ft); (iii) Favorable weather conditions boosting agricultural output and supply; and (iv) Weak domestic demand, despite support from short-term stimulus measures. Overall, average headline inflation for 2025 is projected to turn negative for the first time in five years, at -0.1%.

For the policy rate outlook, Krungsri Research expects the Monetary Policy Committee (MPC) to lower the policy rate to 1.25% at its final meeting of the year on 17 December, to help support economic recovery and ease financial burdens on the private sector. The main factors supporting this view include: (i) a fragile economy that continues to grow below potential; (ii) persistently low inflation, which may below the BOT’s projections of 0% in 2025 and 0.5% in 2026, suggesting it will take time for inflation to return to the 1–3% target range; and (iii) tight financial conditions, reflected in continued credit contraction.

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The number of foreign tourists in 2025 is expected to decline for the first time since recovering from the COVID-19 pandemic. In October, foreign tourists visited Thailand fell by -3.9% YoY to 2.57 mn, while tourism revenue declined by -3.3% to THB 119 bn. The largest groups of visitors came from Malaysia, China, India, Russia, and South Korea. For the first ten months of 2025, Thailand welcomed a total of 26.7 mn foreign tourists (-7.2% YoY), generating THB 1.23 trn in tourism income (-4.5% YoY).

The number of foreign tourists rose to 2.57 mn in October from 2.24 mn in September, supported by an increase in long-haul travelers as Thailand entered the high tourism season. However, the recovery remains limited compared to pre-pandemic levels, as key markets such as Chinese tourists have recovered at a slow pace due to safety concerns and intensifying competition from neighboring countries. In particular, Vietnam has now become the ASEAN country with the highest number of Chinese tourists, recording over 4 mn visitors from China in the first ten months of the year — higher than Thailand’s 3.8 mn. Recently, Krungsri Research has revised down our 2025 forecast for foreign tourist arrivals to 33.3 mn, from a previous estimate of 34 mn, and lower than 35.5 mn in 2024. This marks the first annual decline since Thailand’s tourism recovery began after the COVID-19 pandemic.

Weekly Economic Review

Announced :11 November 2025

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Weekly Economic Review

Macroeconomic