Thailand’s economy experienced a further slowdown in August, in line with market expectations, as a result of continued weakness in domestic activity and the impact of U.S. tariffs.
Kiatnakin Phatra Securities (KKPS) noted that broad-based deceleration was evident on the supply side, with agricultural outputs—especially rice, after earlier gains, and durian, hampered by heavy rainfall—showing a notable decline. Manufacturing also faced headwinds, pressured by temporary factory shutdowns and declining export momentum, while the service sector contracted, despite a modest pick-up in tourism.
The Manufacturing Production Index (MPI) contracted sharply, falling 2.1% month-on-month (seasonally adjusted) and 4.2% year-on-year, with the automotive and alcoholic beverage sectors particularly affected by temporary factory closures. Excluding these segments, the MPI still dropped 1.6% on a monthly basis.
Automotive and food sectors experienced notable declines. In contrast, petroleum saw a recovery following extensive refinery maintenance, while hard disk drive (HDD) production benefitted from an upturn in the electronics cycle.
The manufacturing downturn mirrored weaker export performance, which grew at a more subdued pace of 5.5%, amid softer outcomes in electronics and machinery.
The analysis highlighted that Thailand’s export growth decelerated subsequent to the implementation of U.S. tariffs. Outbound shipments to the U.S. decreased by 7.6% month-on-month, with notable slowdowns in electronics and machinery, as well as semiconductors destined for Taiwan. Machinery exports weakened across key partners, including the U.S., Japan, and China, while agricultural exports—particularly durian—declined to China and Hong Kong.
Service sector production also contracted, dropping 1.4% month-on-month (seasonally adjusted), as declines in trade and transportation mirrored weaker results in agriculture and industry. Nevertheless, tourism-related services saw signs of recovery, supported by the ongoing “Half-Half” travel initiative, which spurred higher spending in hotels, restaurants, and transport. Despite this, private consumption remained subdued, held back by a fall in durable goods spending.
Thailand’s current account reverted to a deficit of $1.6 billion in August, reversing from the previous month’s surplus of $2.2 billion. This swing was primarily attributed to a smaller trade surplus of $800 million and a wider services deficit of $2.3 billion.
Looking ahead, the securities firm noted that the pace of economic activity is likely to slow further in the second half of 2025 as the boost from pre-tariff export diminishes. The previous rebound in manufacturing output appears temporary, with sluggish demand expected to restrict any significant recovery.
While tourism-related services have shown improvement on a month-to-month basis, the high comparison base means they are unlikely to offset persistent economic weakness. As a result, the brokerage firm maintains its view that Thailand’s economic outlook will remain muted through the remainder of 2025.
