Content Writer: Janice Chew • Monday, 25/11/2025 - 19:11:59 - PM
The economy of Thailand slipped into contraction in the third quarter of 2025, marking a troubling turn for a country that has been attempting to rebound post-pandemic and from global trade headwinds. A poll of economists conducted by Reuters found that GDP likely grew just 1.6 % year-on-year in Q3, down sharply from 2.8 % in Q2; on a quarter-on-quarter basis the figure likely contracted by around 0.3 %. The country thus appears to be heading into the year’s second half in fragile shape, despite pockets of strength.
A major drag on performance remains domestic consumption. Household spending, which is a key driver of Thailand’s economy, has been weighed down by high household debt and low consumer confidence. Central bank data cited in reports show consumer spending contracted in July and September and remained flat in August. Meanwhile, exports offered a rare spark of positive news – September shipments surged 19 % year-on-year, driven by electronics and semiconductors tied to artificial-intelligence demand. Yet, strong export numbers alone are proving insufficient to offset weak internal demand and broader structural drag.
Looking across the full year, growth forecasts are being trimmed. The World Bank revised Thailand’s 2025 GDP growth forecast down to 1.8 % (from earlier estimates of 2.9 %). Meanwhile, the Bank of Thailand (BOT) sees growth of around 2.2 % for the year, with 2026 perhaps closer to 1.6 %. The feel is one of a country stuck in slow-motion recovery—unable to muster strong momentum and exposed to both domestic and external risks.
Greater structural issues are at play. Analysts point to Thailand’s heavy household debt burden, aging population, a manufacturing sector losing competitiveness, and elevated geopolitical/trade risk (especially from looming U.S. tariffs). Add to that tourism—once a major recoverer post-COVID‐19—which is still not fully back to pre-pandemic vigour and faces stiff competition from regional neighbours. These deep-rooted challenges mean stimulus and export upswings alone may not be enough to propel a strong rebound.
In response, the Thai government and central bank are activating support measures. The BOT has maintained an accommodative monetary stance and signalled readiness for further rate cuts if needed, noting the economy may already have shrunk in Q3. The cabinet approved a stimulus “co-payment” scheme of around US$1.36 billion (THB 44 billion) to subsidise consumer purchases and stimulate consumption. While these measures provide some relief, economists remain sceptical about their ability to reverse the slowdown without deeper reforms.