Bangkok: The Bank of Thailand (BOT) has announced that the Thai economy experienced a slowdown in May 2025, continuing into June, attributed to a decline in tourist numbers and a deceleration in the industrial production sector. Household debt decreased to 87.4% in the first quarter of 2025. The BOT is closely monitoring tax negotiations with the United States and confirmed that the baht has strengthened in line with regional currencies, with measures in place to manage any potential fluctuations.
According to Thai News Agency, Mrs. Pranee Sudthasri, Senior Director of the Macroeconomics Department at BOT, reported a slight economic slowdown in May 2025, primarily due to reduced activity in the industrial and service sectors, including trade, transportation, and tourism. The industrial production downturn was partly due to inventory replenishing from the previous month and temporary oil refinery maintenance shutdowns.
Tourism revenue declined alongside a 2.9% drop in foreign tourist numbers, notably affecting high-spending long-haul visitors. Private investment also decreased by 0.6% following a previous acceleration, whereas private consumption saw a marginal rise of 0.2%, led by an increase in durable goods despite a fall in services.
Exports surged by 18.5%, especially in the electronics category, driven by strong global demand and relaxed US import tariffs. Government spending contracted by 18.9%, influenced by a high base from the previous year's budget disbursement.
The general inflation rate remained negative, increasing to -0.57% in May from -0.22% in April, primarily due to fresh food prices, while core inflation rose with prepared food prices. The current account deficit reduced as the trade balance returned to surplus, despite losses in the service balance, income, and transfers due to seasonal profit repatriation by foreign businesses. The labor market improved, driven by employment in the manufacturing sector.
Looking ahead to June 2025, the BOT anticipates a continued economic slowdown due to a decrease in tourist numbers and potential export sector impacts from trade wars. The BOT identified four key areas of concern: trade policies of major economies, tourism sector developments, business sector adjustments to increased competition and changing consumer behavior, and domestic political factors.
The BOT also reported a decrease in household debt to GDP from 88.4% in Q4 2024 to 87.4% in Q1 2025, driven by higher GDP and reduced lending.
In response to Deputy Prime Minister and Finance Minister Mr. Pichai Chunhavajira's concerns about the baht's strength, the BOT stated that the currency's strength aligns with regional trends, influenced by a weak dollar and domestic political factors. The BOT remains vigilant and prepared to intervene if the baht's movement deviates from economic fundamentals.