Thailand’s Economy Faces Sharp Slowdown Amid Weak Consumption and Domestic Uncertainty

Thailand’s economic growth likely slowed significantly in the third quarter as weakening household spending and domestic uncertainty overshadowed strong export performance, according to a recent Reuters poll. Economists surveyed between Nov. 10–13 estimated that Southeast Asia’s second-largest economy expanded just 1.6% year-on-year from July to September, down notably from 2.8% growth in the previous quarter. On a quarterly, seasonally adjusted basis, GDP was expected to contract 0.3% after posting 0.6% growth in April–June.

Private consumption, long a key engine for Thailand’s economic growth, has been under heavy strain due to high household debt and fragile consumer confidence. Central bank data highlighted a broad decline, with spending falling 0.2% in July, remaining flat in August, and dropping 0.8% in September. Krung Thai Bank strategist Poon Panichpibool noted that household debt continues to weigh heavily on the economy. In response, the government plans to repurchase 122 billion baht (around $3.7 billion) in small loans from 3.5 million borrowers in phases beginning early next year to help ease financial pressure.

Despite domestic weakness, Thailand’s export sector has shown impressive resilience. Exports surged 19% in September, the fastest pace in more than three years, supported by strong U.S. demand and robust shipments of electronics and AI-related semiconductors. As a result, the Bank of Thailand upgraded its 2025 export growth forecast to 10%, up from its earlier projection of 4%.

However, the broader outlook remains subdued. A separate Reuters poll showed GDP is expected to grow 2.0% in 2024 and 1.8% in 2025. Fitch Ratings recently downgraded the country’s outlook to “negative,” citing ongoing risks, including weaker Chinese tourism, higher U.S. tariffs, and sluggish investment. Economists say that while policymakers are considering rate cuts and the government is preparing $1.4 billion in stimulus measures, longstanding structural issues and political instability continue to hamper sustainable growth.