BANGKOK — Thailand’s consumer confidence index dropped to its lowest point in over two years in May, falling to 54.2 from 55.4 the previous month. This marks the fourth consecutive monthly decline and the weakest reading since March 2023, as concerns mount over potential US trade retaliation under Donald Trump’s administration and Thailand’s sluggish economic recovery.
Thanawat Phonvichai, President and Chief Advisor of the Centre for Economic and Business Forecasting at the University of the Thai Chamber of Commerce, announced the results on June 12.
The continued erosion of consumer sentiment reflects growing public anxiety about global trade tensions and persistent doubts about Thailand’s economic trajectory, despite government stimulus measures and two interest rate cuts totaling 0.5% by the Bank of Thailand this year.
Economic Headwinds Intensify
Thailand faces multiple challenges that threaten to derail its recovery. The country is teetering on the edge of deflation, with negative inflation readings in April and May driven primarily by falling oil prices. More concerning, core inflation remains below 1%, signaling weak domestic demand and purchasing power.
Economic growth projections paint a sobering picture. GDP expansion is expected to reach just 1% in the second quarter, with first-half growth likely capping at 2%. Without significant improvement in the latter half of 2025, full-year growth could fall short of 2%.
The situation could deteriorate further when the US ends tariff exemptions under the Reciprocal Tariff Regime on July 7, 2025. Should negotiations fail and universal retaliatory tariffs be imposed, Thailand’s GDP could contract by 2%, potentially pushing annual growth below 1%.
Urgent Policy Response Needed
Economists are calling for immediate government action, including rapid disbursement of the 175 billion baht stimulus budget and aggressive tourism promotion targeting 35 million international visitors this year, with particular focus on reviving the Chinese market. The central bank faces pressure to cut rates by another 0.5% to support the economy.
Political stability also remains crucial, as parliamentary dissolution could delay critical stimulus spending. Business leaders have outlined six key priorities: enhanced stimulus measures, improved business liquidity support, better water management, sustained tourism promotion across all regions, SME support, and reduced tax burdens.
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