Thai economy in May sees tourism decline and slower consumption despite export growth

The Ministry of Finance has reported that the Thai economy in May 2025 showed mixed signals, with exports continuing to grow for the 11th consecutive month, while foreign tourist arrivals dropped sharply by 13.9%. Meanwhile, private consumption indicators slowed, prompting officials to monitor domestic and global risks closely.

Pornchai Thiraveja, Director of the Fiscal Policy Office, noted that while exports remain the economy’s bright spot, supported by strong demand across key markets, the tourism sector faced a notable dip and consumer confidence declined.

Private Consumption Indicators

Private consumption showed signs of deceleration compared to the same period last year. New motorcycle registrations in May 2025 declined by 1.2% year-on-year, and by 7.0% month-on-month after adjusting for seasonal effects.

Real agricultural income for the month dropped 4.7% compared to the previous year, while the Consumer Confidence Index declined to 54.2, down from 55.4 in April. This was attributed to the overall slow pace of economic recovery and growing concerns about ongoing geopolitical tensions.

However, there were positive signs, such as new passenger car registrations, which increased by 8.7% year-on-year and 2.5% month-on-month (seasonally adjusted), indicating some resilience in consumer spending on durable goods.

Private Investment Indicators

Private sector investment remained flat compared to the same period last year. Investment in machinery and equipment, reflected through preliminary data on capital goods imports, increased by 36.2% year-on-year and 6.5% month-on-month (seasonally adjusted).

However, new commercial vehicle registrations in May 2025 dropped by 10.9% year-on-year and 5.8% compared to the previous month, after seasonal adjustment, suggesting weakening sentiment in business logistics and transport sectors.

Thailand’s export sector continued to expand for the 11th straight month. In May, total export value reached US$31.04 billion, representing a year-on-year growth of 18.4% — the highest rate in 38 months since March 2022.

When excluding oil, gold, military-related goods, and associated products, core export value grew by 20.3%, reflecting strong demand in real sector commodities.

Notable export performers included: Canned and processed fruits (+24.9%), tapioca products (+15.5%), canned and processed seafood (+10.2%)

However, certain export categories posted declines, including rice, rubber, and telecommunications equipment such as phones and accessories.

Exports increased in several major trade partners, including United States (+35.1%), China (+28.0%), India (+27.5%). Meanwhile, declines were recorded in Japan (-0.9%), ASEAN-5 (-0.3%).

Supply-Side Economic Indicators

Tourism services, particularly from foreign tourists, showed signs of slowing down, while domestic tourism continued to grow compared to the same period last year.

In May 2025, the tourism services sector recorded 2.27 million international tourist arrivals, a 13.9% decline year-on-year and a 2.5% decrease from the previous month after seasonal adjustment.

Meanwhile, domestic tourism remained robust. In May 2025, there were 22.9 million domestic visitors, representing a 1.9% year-on-year increase, and a 3.0% rise compared to the previous month (seasonally adjusted).

The agricultural sector, as reflected by the Agricultural Production Index, rose by 4.3% year-on-year in May 2025, though it fell 1.0% from the previous month after seasonal adjustment. The growth was mainly driven by increased output in key crops such as rice, rubber, and livestock products. However, cassava, oil palm, and maize production declined from the previous month.

The Industrial Confidence Index fell to 88.1 in May 2025, down from 89.9 the previous month. The drop was attributed to concerns over border tensions, declining agricultural prices, and fears surrounding US import tariff hikes.

However, the Purchasing Managers’ Index (PMI) for Thailand improved to 51.2, up from 49.5 in April, supported by an increase in export orders.

Thailand's overall economic stability remains sound. The headline inflation rate in May 2025 was -0.57%, indicating deflation, while the core inflation rate stood at 1.09%. Public debt as of the end of April 2025 was 64.8% of GDP, which is still within the fiscal discipline threshold defined under the State Fiscal and Financial Discipline Act B.E. 2561 (2018).

External stability remains solid and capable of withstanding global economic volatility. This is reflected in the international reserves, which stood at a high level of US$257.6 billion at the end of May 2025.

Global Economic and Financial Situation

The global economic situation improved from the previous month, as reflected in the Global Composite Purchasing Managers’ Index (PMI) for May 2025, which rose to 51.2, up from 50.8 in April. The index remaining above the 50-point threshold indicates that the global economy is expanding at an accelerating pace.

However, the Global Manufacturing PMI for May 2025 fell slightly to 49.6, down from 49.8 in the previous month. The decline was seen across several sub-indices, including new orders and output, suggesting a slight weakening in manufacturing momentum.

In contrast, the Global Services PMI increased to 52.0, up from 50.9 the previous month, recovering from a 17-month low recorded in April 2025. With the index above 50, it points to continued expansion in the global services sector.

The global tourism sector also showed signs of improvement compared to the previous month. However, inflation trends and the monetary policy direction of various countries remain important to watch. Geopolitical tensions, such as the ongoing conflict between Israel and Iran and the United States’ trade protection measures, continue to pose significant risks to the global economy, which remains under a high degree of uncertainty.

Thailand’s Financial Market Overview

Thailand’s financial markets are beginning to show signs of recovery, particularly in the equity market, driven by renewed activity from domestic retail investors.

In June 2025 (as of 23 June), domestic individual investors recorded net purchases totalling 24.92 billion baht, a significant increase from 11.83 billion baht in May. This brought year-to-date (YTD) net purchases to 112.17 billion baht, reflecting strong household confidence in investing in the Thai stock market.

Meanwhile, foreign investors posted a net purchase of 913.35 million baht on 23 June, though their total net position for the month remained negative at -10.60 billion baht. However, the pace of net selling has slowed, compared to -16.15 billion baht in May.

In the bond market, foreign investors sold a net amount of -1.32 billion baht on 23 June, bringing the total monthly net sell to -20.92 billion baht, indicating short-term portfolio adjustments.

Nevertheless, looking at the year-to-date figures, foreign investors are still net buyers in the bond market, with holdings of 40.11 billion baht, indicating continued confidence in Thailand’s fiscal stability and the security of Thai government bonds as safe-haven assets, amid ongoing global economic uncertainty and tight monetary policy in major economies.