Monthly economic update: July 2025
Executive summary
Global Economy
- In July 2025, Tariff tensions returned to the spotlight despite the postponement of the effective date to August 1. Meanwhile, global economic data, especially from the US, delivered positive surprises. Inflation pressures remained subdued overall.
- US economic data have yet to reflect the impact of tariff hikes, with recent inflation showing no clear effect. Meanwhile, NFP figures confirmed continued labor market resilience. In China, H1 data remain on track for the 5% GDP target, but H2 faces uncertainty as exports come under pressure amid weak domestic demand.
- Expectations for Fed rate cuts have eased following recent US data, despite pressure from Trump. Meanwhile, Asian central banks have turned more dovish amid growing economic concerns.
Domestic Economy
- In May 2025, Thai economy soften from the previous month, due to a slowdown in activity across several sectors. The tourist arrivals remained stable compared to the same period last year. Private investment dropped, mainly in machinery and equipment. Manufacturing indicator also soften across several categories. Meanwhile, merchandise exports continued to increase, aligning with the high import value, marking trade surplus in this month.
- Headline inflation in June 2025 remained negative marking a third-consecutive month due to the falling prices of fresh food and energy items. However, price of some products mark higher, meanwhile, the core inflation remained stable from the previous month.
- Due to the ongoing uncertainty of US tariff, Thailand's industries that rely on export-revenues rather than domestic revenue are at risk. These include industries such as poultry feed production, canned tuna manufacturing, pickup truck production, and air conditioner manufacturing. Moreover, several export-oriented industries heavily relied on the US market.
Financial Market
- US yields rose on lower Fed cut odds. In contrast, Thai bond yields continued to decline, exhibiting a bull flattening pattern that suggests market expectations of further rate cuts amid Thailand’s weak economic growth and subdued inflationary pressures.
- In July, the dollar gained momentum supported by resilient economic data. Nonetheless, the broader trend of de-dollarization is expected to persist into the second half of the year, given ongoing uncertainties—particularly around trade policy and the resurfacing of concerns over the Fed’s credibility. Meanwhile, The Thai baht appreciated against the dollar, diverging from most major and regional currencies.
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