Economy Thailand Faces Economic Slowdown Amid Weak Consumer Spending and Industry Struggles

[snoop1130]

File photo for reference only

 

As Thailand braces for a potential economic downturn in the second quarter of 2025, signs of weakening consumer spending and confidence are becoming evident across multiple sectors. This comes as the National Economic and Social Development Council (NESDC) revised its economic growth forecast from 2.8% to a more modest 1.8%. While the first quarter experienced a 3.1% year-on-year expansion, caution has been advised in light of anticipated slowdowns.

 

Housing Market Confronts Uncertainty

 

In the housing sector, the impact is palpable. Kessara Thanyalakpark, managing director of Sena Development, outlines a cautious market where consumers are reluctant to embark on large financial commitments like buying homes. This reticence is driven by concerns over economic uncertainty and surging household debt. The average mortgage rejection rate has climbed above 50% as banks tighten lending practices, no longer recognizing overtime pay as part of income due to fears around economic instability. The residential market is expected to contract, leading many developers to explore non-residential opportunities, particularly in industrial real estate where demand remains steady.

 

Auto Industry Navigating Uncertainty

 

Similarly, the automotive sector faces its own challenges. Martin Schwenk, CEO of Mercedes-Benz (Thailand), underscores the growing caution among consumers contemplating car purchases amid an unstable economy and spiralling household debt. Domestic vehicle sales have dropped, with passenger cars and pickups experiencing the steepest declines. The overall market is likely to shrink, as stricter loan conditions and heightened economic uncertainty deter potential buyers.

 

Banking Sector Experiences Strain

 

The banking sector is not immune to these challenges. The Kasikorn Research Center (K-Research) forecasts minimal loan growth at 0.6% for 2025, with a notable contraction in auto loans projected at 7.5%. The sector faces pressure from global trade tensions and domestic economic uncertainty, leading to tighter borrowing conditions and challenging consumer spending patterns. Despite attempts to stimulate the economy through policy rate cuts and eased lending restrictions, loan growth remains subdued.

 

Energy and Retail Sectors Adjust Strategies

 

In the energy sector, PTT Oil and Retail Plc (OR) confronts potential impacts from global trade dynamics and sluggish economic growth. Pitirat Rattanachote, manager for investor relations, cites efforts to manage oil inventory and engage in price hedging as strategies to counteract potential stock losses. The varying demand for fuel types reflects broader economic trends, with diesel, gasoline, and gasohol consumption reducing.

 

Retailers like Kamol Pork and school uniform producer Nomjitt Manufacturing are also adapting. Kamol Pork, which oversees a network of pork retail shops, has observed shifts in purchasing habits among middle and lower-income consumers. Reduced sales and a higher number of closed outlets reflect these trends, with many restaurants altering their supply strategies.

 

For Nomjitt Manufacturing, sales of school uniforms have been impacted by consumer hesitance, with families opting to extend the use of existing uniforms due to financial constraints. This trend reflects wider economic caution among consumers, even affecting routine purchases like educational supplies.

 

Tourism Sector and Local Economies

 

Tourism, a vital component of Thailand's economy, faces its own hurdles. According to Paisarn Sukjarean from the Thai Hotels Association, occupancy rates in Chiang Mai hotels have declined, influenced by a reduction in both Thai and Chinese tourist numbers. The ripple effect on local businesses, particularly in agriculture, is notable, as reduced visitor sales impact local economies reliant on tourism spending. With many awaiting government co-payment campaigns to boost travel and consumption, the delay in such interventions exacerbates the impacts on tourism-reliant regions.

 

Resilience in the Beauty Industry

 

Notably, the beauty sector, exemplified by Eveandboy Co., has shown resilience amidst economic challenges. The sector's reliance on emotional and lifestyle-driven consumer behavior helps it weather broader economic downturns. Brands within the industry continue to develop unique identities to engage consumers, ensuring steady demand despite economic fluctuations.

 

Call for Government Action

 

The collective economic picture presents a challenging landscape as Thailand seeks to navigate these multifaceted issues. With industries across the spectrum adjusting strategies to mitigate losses, stakeholders urge the government to implement initiatives that stimulate economic growth and bolster consumer confidence. As global and domestic headwinds persist, concerted efforts are necessary to sustain economic momentum and address the nuanced challenges facing Thailand's key sectors.

 

  Adapted by ASEAN Now from Bangkok Post 2025-05-26

 

 

[FlorC]

No mention of the tariffs ?

 

Thailand Faces Economic Slowdown Amid Weak Consumer Spending and Industry Struggles

 

We all know what that means : stronger (teflon) Baht.

[peter48]

Am I missing something but not a single reference to Trump imposing some of the highest tariffs on Thailand?  In most  countries even with lower tariffs this is the hot topic. 

[topt]

45 minutes ago, FlorC said:

No mention of the tariffs ?

 

18 minutes ago, peter48 said:

Am I missing something but not a single reference to Trump imposing some of the highest tariffs on Thailand?  In most  countries even with lower tariffs this is the hot topic. 

I don't necessarily disagree however the article seems to be only referring to domestic consumption in many forms. 

Exports are specifically not mentioned - that I could see.......even in the bit about the auto industry.

[peter48]

Yes but I think we can infer that a significant drop off  in exports to USA will affect Thai economy,factories,jobs, incomes. Or perhaps I am wrong and I have missed something. 

[norsurin]

1 hour ago, FlorC said:

No mention of the tariffs ?

 

Thailand Faces Economic Slowdown Amid Weak Consumer Spending and Industry Struggles

 

We all know what that means : stronger (teflon) Baht.

Right.They allways find the way to make it stronger.Export downhill already but they actually don't care.

[hotchilli]

PTP have achieved nothing substantial as regards to the economy since stealing power after the election.

[ChipButty]

Here in Rawai, it has definitely slowed down, almost everybody I speak to say it's quiet, 

I went down the beach the other morning it was a lovely morning but it was not busy

[jcmj]

The Baht is just too strong. If they want more income from tourists and retirees here then get the baht to a reasonable level. I want to purchase a car, but not about to send money over at the current rate. They need to use their heads and some common sense. 

[LivingNThailand]

17 hours ago, ChipButty said:

Here in Rawai, it has definitely slowed down, almost everybody I speak to say it's quiet, 

I went down the beach the other morning, it was a lovely morning but it was not busy

I was at Lotus Samkong yesterday.  Not a tourist hot spot, but there are usually some tourists and I didn't see any.   Even the locals were thinned out.  I didn't have to wait to pay, and when I left, there were still plenty of parking spots available.   What is weird, too, lots of Thais are wearing masks.  More than the normal "I have a cold" maskers.  Hum?

[LivingNThailand]

32 minutes ago, jcmj said:

The Baht is just too strong. If they want more income from tourists and retirees here then get the baht to a reasonable level. I want to purchase a car, but not about to send money over at the current rate. They need to use their heads and some common sense.

Yep, I need to move some money over here soon but keep waiting for the baht rate to get better.   I'm thinking of just sending a little over now and "hope" the rate gets better in a month or two.