Monthly economic update: October 2025
Executive summary
Global Economy
- In October 2025, the global economic data continue to signal a slowdown in the second half of the year. However, PMIs remain in expansionary territory, with readings above 50. The global services sector has shown greater resilience, while manufacturing activity has moderated but continues to expand. Meanwhile, tensions between the US and China have reemerged.
- The US government shutdown creates uncertainty for the US economy as key indicators are indefinitely delayed. Meanwhile, China’s slowdown milder than expected, on track for annual target but growth uneven.
- For monetary policy, the Fed’s easing cycle is underway, while other central banks’ cycles are nearly complete.
Domestic Economy
- In August 2025, Thai economy continued to broadly soften from the previous month. Private consumption remained stable, while private investment continued to decline. Merchandise export slowed regarding US tariff enforcement aligning with contraction in manufacturing production. Moreover, foreign tourist arrivals was relatively stable compared to last month.
- The headline inflation (CPI) declined slightly less than the previous month in September 2025. The main factors came from the falling prices of fresh food items, particularly fresh vegetables, fresh fruits and eggs due to higher supply. Moreover, the energy prices also further declined following the global energy prices including electricity price regarding to government subsidy measures.
- Monetary Policy Committee (MPC) voted to hold its benchmark policy rate at 1.50% in the October’s meeting, indicating the close to previous assessment of Thai economy in 2025 and 2026. However, headline inflation is projected to lower than expected to move below the lower-bound of central bank target before gradually returning to the target range by early 2027.
Financial Market
- US Treasury yields fell across the curve, led by the long end, driven by safe-haven demand amid renewed US–China trade tensions and regional bank concerns. In contrast, Thai government bond yields rose across the curve following the MPC’s unexpected decision to hold rates, triggering position unwinding and profit-taking.
- The Dollar strengthened overall compared to the previous month, partly due to non-US factors. However, renewed US-China tensions and worries about regional banks briefly limited the dollar’s gains. The Thai baht has weakened against the US dollar since mid-September, even though gold prices have been rising. This unusual move is likely due to government efforts to limit the baht’s strength.
