Monthly economic update: April 2025
Executive summary
Global Economy
- From March to mid-April 2025, ongoing tariff uncertainty, along with higher-than-expected announcements of reciprocal tariffs, continues to impact global economic indicators, especially sentiment-based data. Recent inflation pressures have been easing in both developed and emerging markets. Despite the current slowdown, a tariff hike could reignite inflation, particularly in goods prices.
- The US economy remained resilient given the recent hard economic data, despite rising fears of a sharp economic slowdown following the Liberation Day tariffs. Meanwhile, labor data was solid, and inflation data continued to ease; these figures support the Fed's decision to pause at the upcoming meeting.
- Despite strong recovery momentum from better-than-expected Q1 2024 GDP and solid economic activity in March, the ongoing US-China tariff retaliation could soon slow Chinese economic growth. However, the expected stimulus package should help partially mitigate this impact.
Domestic Economy
- In February 2025, Thai economic activities softened from previous month due to lower number and revenue of foreign tourists and manufacturing production. Moreover, private investment indicators also declined in line with lower investment in construction and machinery. However, private consumption indicators improved. Merchandise trade marked an eighth consecutive month growth with strong momentum to avoid ongoing US trade policy uncertainty.
- On the economic stability front, headline inflation in March 2025 moved slightly below the official target. Notably, trade balance (Custom basis) marked a surplus following a great expansion in exports leading to the current account balance also increased remarkably from previous month.
- Despite announcing a 90-day pause on most of previously announced tariffs, though policy uncertainty leading to a sharp economic slowdown. According to preliminary analysis, Thailand economic growth could decline compared to baseline projection up to 1.1 percentage point regarding to increase in US reciprocal tariff rate of 36%.
Financial Market
- Tariff fears triggered bond market volatility, with US assets losing appeal amid rising long-term yields. In contrast, EM Asia bonds gained favor on expectations of rate cuts and limited inflation risks.
- The dollar index fell to a new three-year low, dropping below the 100 level as investors grew worried about risks to economic growth and rising inflation due to higher-than-expected tariffs. Despite the potential impact of tariffs, both major and regional currencies strengthened due to the dollar’s movement. However, major currencies saw greater appreciation against the dollar compared to regional currencies.
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