≡-Thai Economy Struggles In May As Tourism Drops And Consumption Slows, Despite Resilient Export Growth – Viral of Today

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Home » THAILAND » Thai Economy Struggles In May As Tourism Drops And Consumption Slows, Despite Resilient Export Growth Sunday, June 29, 2025In May 2025, Thailand’s economy presented a mixed picture, with exports continuing to show robust growth while other sectors, including tourism and domestic consumption, faced challenges. Exports reached US$31.04 billion, marking the 11th consecutive month of growth, driven by high demand from key markets. Despite this positive performance in exports, Thailand’s foreign tourism sector experienced a significant downturn, with international tourist arrivals dropping by 13.9% year-on-year. This sharp decline in tourist numbers was accompanied by signs of slowing domestic consumption, prompting concern over potential economic risks moving forward.The Ministry of Finance highlighted these mixed economic signals, with exports maintaining a strong positive trajectory. However, the declining tourism numbers, coupled with a slowdown in private consumption, underscored the fragility of certain segments of the economy. Private consumption indicators revealed notable declines, especially in sectors like motorcycle registrations, which fell by 1.2% year-on-year and 7.0% month-on-month after seasonal adjustments.The Consumer Confidence Index fell to 54.2 in May, down from 55.4 in April, indicating increasing apprehension among consumers regarding the future economic situation. These challenges have raised alarms over the sustainability of Thailand’s recovery, especially as geopolitical tensions continue to weigh on global sentiment.Agriculture, a vital sector for the Thai economy, also showed mixed results. The Agricultural Production Index grew by 4.3% year-on-year, driven by gains in key crops like rice and rubber. However, this growth was tempered by declines in the production of cassava, oil palm, and maize, which affected the overall performance of the sector. Despite this, Thailand’s agricultural output continues to provide essential support to the economy, even as other sectors show signs of strain.In the private sector, investment in machinery and equipment continued to grow, with capital goods imports rising by 36.2% year-on-year and 6.5% month-on-month. However, the commercial vehicle sector, a barometer of business sentiment, saw a 10.9% decline in registrations year-on-year and a 5.8% drop from the previous month. This decline in commercial vehicle registrations points to weaker sentiment within the business logistics and transportation sectors, which are critical to supporting the broader economy.The export sector, despite the challenges in tourism and domestic consumption, remained a bright spot. The value of exports in May reached the highest growth rate in over three years, with an 18.4% year-on-year increase. Excluding oil, gold, and military-related products, the core export value increased by 20.3%. Key export categories that performed particularly well included canned and processed fruits (+24.9%), tapioca products (+15.5%), and canned seafood (+10.2%). This positive export performance was largely driven by strong demand from major trading partners, including the United States, China, and India, with export values rising by 35.1%, 28.0%, and 27.5% respectively. However, some export categories, including rice, rubber, and telecommunications equipment, showed signs of decline, highlighting the uneven performance across various sectors.The tourism sector, which had been a major driver of Thailand’s economic recovery post-pandemic, faced considerable setbacks in May. International tourist arrivals, which totaled 2.27 million in May, dropped by 13.9% year-on-year and 2.5% from the previous month after seasonal adjustments. In contrast, domestic tourism remained resilient, with 22.9 million domestic visitors recorded in May, reflecting a 1.9% year-on-year increase and a 3.0% month-on-month rise. This divergence between domestic and international tourism trends suggests that while Thailand remains a popular destination for local travelers, international visitors are still reluctant to return in large numbers, partly due to the global economic and geopolitical uncertainties.Looking at industrial confidence, the Industrial Confidence Index fell to 88.1 in May from 89.9 in April, reflecting concerns over border tensions, falling agricultural prices, and the possibility of increased US tariffs. However, the Purchasing Managers’ Index (PMI) improved to 51.2, up from 49.5 in April, suggesting that manufacturing activity may be picking up, with export orders seeing an uptick.Thailand’s overall economic stability remained sound, with headline inflation at -0.57%, indicating deflation, while core inflation stood at 1.09%. Public debt remained within acceptable limits, at 64.8% of GDP. External stability was also maintained, with international reserves reaching a robust US$257.6 billion at the end of May 2025, providing a buffer against potential external shocks.On the global stage, economic indicators were mixed, with the Global Composite PMI rising slightly to 51.2, indicating global economic expansion. However, the Global Manufacturing PMI showed a slight decline, signaling weakening momentum in the manufacturing sector. The global services sector, in contrast, saw a recovery, with the PMI rising to 52.0, reflecting ongoing growth in this area.Thailand’s financial markets are beginning to show signs of rebound, particularly in the stock market. Domestic retail investors have been particularly active, with net purchases reaching 24.92 billion baht in June, a substantial increase from May’s 11.83 billion baht. Foreign investors, while still posting a net sell position, showed signs of reduced selling pressure compared to earlier months.Overall, while Thailand’s economy faces some challenges in sectors like tourism and domestic consumption, the strong export performance and resilience in domestic tourism provide a solid foundation for future growth. Moving forward, careful monitoring of both domestic and global risks will be crucial in navigating the ongoing economic uncertainties.«Enjoyed this post? Never miss out on future posts by following us»

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