Monthly economic update: December 2025
Executive summary
Global Economy
- In December 2025, global economic data continued to show a slowdown, though overall resilience remained, as reflected in PMI readings. In terms of price pressures, Asian countries posted more positive surprises, but their CPI growth still lags that of developed markets.
- For the US economy, recent Fed-watch indicators such as NFP and CPI remain consistent with expectations of further easing next year. Despite this, private consumption remains solid, as reflected in retail sales. Meanwhile, China’s economy lost momentum in Q4 2025, with November industrial production, retail sales, and fixed asset investment falling short of expectations. The property sector remains a headwind. Politburo and CEWC guidance point to policy continuity in 2026.
- On the policy front, the final global central bank meetings in 2025 largely met market expectations.
Domestic Economy
- In October 2025, overall economic activity showed a modest change with mix development. Foreign demand rose as supported by robust merchandise exports and higher tourist arrivals. Private consumption also improved across nearly all categories. Nonetheless, private investment continued to decline across major categories, particularly in lower investment in machinery and equipment.
- The headline inflation (CPI) remained contract for the eight-consecutive months in November 2025. The main factors were primarily attributed to the falling prices of several food items due to persistently low in raw food prices transmission. The energy prices also declined following the global energy prices including electricity price regarding to government subsidy measures. The core inflation edged up slightly, following the increase in non-alcohol beverage and ready-to-eat food prices.
- In the sixth meeting of 2025, the Monetary Policy Committee (MPC) voted unanimously to cut the policy rate to 1.25%, marked its lowest level in three years, with an assessment that apparent economic slowdown and limited demand-driven inflationary pressure. Overall credit continued to contract, and credit quality of vulnerable groups still deteriorated. SMEs faced liquidity challenges stemming from both limited credit access and the strengthening of the Thai baht.
Financial Market
- Both US and Thai bond yields have been largely driven by policy rate cuts, forming a bull steepening curve. Looking ahead, the US yield curve is expected to continue steepening as the Fed’s easing cycle unfolds. Likewise, markets continue to price in further downside risk for the Thai policy rate, although the timing remains uncertain.
- The dollar weakened after the FOMC cut, which was less hawkish than expected. Meanwhile, the Thai baht outperformed regional peers, supported by typical year-end strength. Higher gold prices, which recently reached a record high, added some pressure on the baht. Looking ahead, despite weak economic fundamentals, the baht is likely to continue strengthening, supported mainly by a soft US dollar.
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