Thai Q3 growth misses forecast with slowest pace in four years

[BANGKOK] Thailand’s economy grew at its slowest pace in four years in the third quarter, weighed down by weaker tourism and manufacturing during a period of domestic political uncertainty and a border conflict, official data showed on Monday (Nov 17).

Gross domestic product grew 1.2 per cent in the July to September quarter from a year earlier, said the National Economic and Social Development Council (NESDC).

That was slower than the annual growth of 2.8 per cent in the June quarter, and missed the median forecast of 1.6 per cent growth in a Reuters poll.

On a quarterly basis, South-east Asia’s second-largest economy contracted by a seasonally adjusted 0.6 per cent, the first decline in nearly three years.

NESDC head Onfa Vejjajiva said she expected the economy to grow in the current quarter as consumption and tourism recovered, and therefore avoid a technical recession.

“In the third quarter, the main issue was economic confidence. There was considerable political volatility, and then the conflict with Cambodia,” she told a press conference. A border dispute with Cambodia erupted into five days of fighting in late July.

In August, the Constitutional Court removed then prime minister Paetongtarn Shinawatra for an ethics violation. Anutin Charnvirakul, the new prime minister, has promised to dissolve parliament by the end of January, with a general election likely to be held in late March.

Shivaan Tandon, Asia economist at Capital Economics, said the economy was likely to struggle in coming months.

“We expect the economy to grow at a below-trend pace in the coming quarters, and the central bank will want to do its part to revive activity,” Tandon noted.

SEE ALSO

As Thailand’s EV adoption grows, its automotive market wrestles with aftershocks 

Minor in name, a powerhouse in reality: Thailand’s William Heinecke far from ready to call it a day

The economy grew 2.4 per cent annually in the first nine months of 2025, and the council adjusted its full-year forecast to 2 per cent from a previous estimate of 1.8 to 2.3 per cent. It predicted growth of 1.2 to 2.2 per cent for next year.

However, government stimulus measures so far and forthcoming programmes have not been fully reflected in the forecasts, Onfa said. The government has rolled out a US$1.36 billion consumer subsidy scheme, among other measures.

On Monday, Finance Minister Ekniti Nitithanprapas said he was confident that the economy would grow above 2 per cent this year. The economy, which has lagged regional peers since the pandemic, has faced multiple headwinds this year, including US tariffs, high household debt and a strong baht. “The impact of tariffs will be clear next year, but that would also depend on negotiations,” Onfa added. The US tariff on Thai imports is 19 per cent, in line with regional peers.

The NESDC forecast exports to rise by 11.2 per cent this year and fall 0.3 per cent next year. The central bank held its key rate steady at 1.5 per cent last month after four cuts totalling 100 basis points since October 2024. The next rate meeting is on Dec 17.

Tandon at Capital Economics is expecting the rate to be cut to 1 per cent in the coming quarters. REUTERS