Kiatnakin Phatra Securities (KKPS) reported that Thailand’s economy improved in July on both the demand and production sides, supported by the ongoing AI CAPEX cycle, easing conflict in the Middle East, and fiscal measures.
Manufacturing production expanded by 0.5% year-on-year after three straight months of decline, while capacity utilization held steady at 57.2%. Production among firms with export share above 30% increased, led by electrical appliances, automotive production, and sugar production. In contrast, production among firms with export share below 30% declined, mainly from lower prepared animal feed output.
Private consumption grew 3.2% year-on-year in July, slowing from 4.6% in June. Non-durable consumption remained intact at 2.4%, supported by the 60/40 co-payment scheme. Durable and services consumption stayed resilient, rising 11% and 4.1%, respectively, driven by higher passenger car and pickup truck sales as well as stronger domestic tourism during the extended holiday. Semi-durable consumption declined due to lower textile and apparel imports.
Private investment growth also moderated but remained strong at 12.9% year-on-year, compared with 18.6% in the previous month. The slowdown came from lower investment in machinery and equipment, especially telecommunications, electrical equipment, and specialized machinery.
Agricultural production contracted 1.5% YoY in July, while agricultural prices increased 11.7%, lifting farm revenue by 10%. On a year-to-date seasonally adjusted basis, agricultural production, prices, and farm revenue rose by 2.1%, 0.4%, and 2.6%, respectively.
Thailand’s current account posted a deficit of $1.6 billion in July. KKPS noted that the trade account improved close to balance as the energy import bill eased, but the net services balance became more negative due to primary income payments. The brokerage expects the current account to improve alongside the energy trade balance, though it is likely to remain thin due to strong non-energy imports.
KKPS said July data pointed to a sequential recovery in the third quarter of 2026 after the slowdown in the second quarter from rising energy prices. The recovery was supported by the consumption subsidy scheme, strong EV sales, solid private investment, and higher manufacturing production, particularly electronics in line with strong exports.
However, KKPS cautioned that the recovery could remain subdued as many activities are linked to higher import content, generating low value-added to the economy and reflected in the current account and trade deficits.
