Thailand's economy remained stable in June, but the second quarter was the lowest. The Bank of Thailand expects a recovery in the third quarter.
The Bank of Thailand revealed that the Thai economy remained stable in June, but the second quarter was the lowest point, facing the impact of a "perfect storm" of energy prices and war, which pressured tourism and the cost of living. It expects a recovery in the third quarter driven by government measures, data center investment, and the global electronics cycle. The Bank of Thailand is also monitoring employment issues resulting from factory closures.
On July 31, 2026, Ms. Chayawadee Chaiyanan, Assistant Governor for Corporate Relations and Spokesperson of the Bank of Thailand (BOT), revealed at the BOT Monthly Briefing for July 2026 that the overall economic outlook for June 2024 remained stable compared to the previous month. However, the second quarter showed a significant slowdown compared to the first quarter, both when compared to the same period last year and the previous quarter, due to facing a "Perfect Storm" caused by energy prices and the war situation affecting the cost of living and tourism.
"The Bank of Thailand estimates that the economy in the second quarter will be lower than in the first quarter, but will improve in the third quarter, driven by government stimulus measures, the upward cycle of global electronics, and investment in data centers."
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The state of the Thai economy in June 69.
Private consumption, the seasonally adjusted indicator of private consumption, increased from the previous month due to spending in...
1) Non-durable goods category: Sales of consumer goods are reflecting the impact of government measures initiated in June 69, including the "Thai Help Thai Plus" program and the state welfare card, as well as fuel sales returning to more normal levels after retail fuel prices decreased.
2) Durable goods category, based on motorcycle registration figures and passenger car sales, partly due to increased consumer preference for electric vehicles, and...
3) The semi-durable goods category saw increases due to imports of textiles and garments, while the services category declined, particularly hotels and restaurants, in line with the decrease in tourism activity. The consumer confidence index improved due to government measures and positive developments in the conflict in the Middle East.
In terms of private sector investment, the seasonally adjusted private sector investment indicator increased from the previous month, driven by increased investment in machinery and equipment, following higher domestic machinery sales, particularly electrical equipment. This aligns with improved investment performance in some export-oriented business groups, driven by the global electronics cycle, and investment in large data centers.
While net capital goods imports decreased, primarily due to a decline in general-purpose machinery, investment in the construction sector increased, driven by the construction of non-residential buildings, especially factories and commercial properties. However, the vehicle sector saw a decrease in imports of ships and drilling rigs after an increase in the previous month, despite rising vehicle registrations and aircraft imports.
For tourism, the seasonally adjusted number of tourists decreased from the previous month, particularly tourists from nearby markets of various nationalities such as China, India, and South Korea. This was due to both decreased demand and reduced flights by airlines because of high energy costs. In addition, the number of Malaysian tourists decreased after a surge in the previous month due to an unusually long holiday weekend. Seasonally adjusted tourism revenue also declined in line with the decrease in the number of foreign tourists.
export of goods
The seasonally adjusted value of merchandise exports, excluding gold, increased from the previous month in several key categories, including:
1) Electronics, based on exports of telecommunications equipment to the United States and Singapore, and electronic circuit boards and components to China and Hong Kong.
2) Petroleum: Exports to Malaysia and Vietnam are driven by trading partners' demand and increased production of refined oil products in the preceding period.
3) Machinery and equipment exports to the US and Norway increased. However, the agricultural and processed agricultural products sector declined due to lower durian exports to China. Exports to the Middle East increased as a result of the gradual reopening of the Strait of Hormuz. Nevertheless, the conflict situation remains highly uncertain.
Meanwhile, imports, excluding gold and seasonally adjusted, decreased from the previous month. This was due to a decline in the fuel category, driven by lower imports of crude oil from the Middle East and other sources after accelerated imports in the preceding period, as well as a decrease in consumer goods due to lower imports of non-durable items.
In particular, imports of pharmaceuticals and medicines from Europe increased. However, imports of durable goods increased, especially mobile phones and textiles from China and Vietnam, as well as the continuously increasing trend of electric vehicles from China. Meanwhile, the raw materials and intermediate goods category, excluding fuel, increased due to imports of electronic components and electrical appliances from China and Taiwan, and the capital goods category, excluding aircraft, increased due to imports of machinery and equipment from China and Taiwan.
for government spending
The economy expanded compared to the same period of the previous year, driven by both current and capital expenditures of the central government. Current expenditures increased due to disbursements of pensions, personnel budgets, and healthcare costs. Capital expenditures expanded due to disbursements by security agencies and public infrastructure projects, as well as carryover budgets, particularly projects under the 2568 central economic stimulus budget. Meanwhile, capital expenditures of state-owned enterprises contracted, mainly due to decreased investment in public infrastructure and transportation.
On the supply side of the economy, industrial production, with the seasonally adjusted industrial production index, declined from the previous month. Production in the export-oriented sector, which accounted for less than 30 percent of total output, decreased, primarily due to the petroleum sector, driven by temporary factors such as partial refinery maintenance shutdowns.
For the group producing for export (30-60%), the decline was mainly in the automotive sector, specifically in the non-electric vehicle category, due to decreased domestic popularity, and in pickup trucks, where manufacturers used inventory clearance for deliveries instead of increasing production. Meanwhile, for the group producing for export (over 60%), the decline was mainly in the electrical appliance sector, particularly in air conditioner production, consistent with declining exports.
However, considering manufacturing activity indicators outside the Manufacturing Production Index (MPI), which are estimated from manufacturers' sales based on Value Added Tax (VAT) submissions to the Revenue Department, it reflects increased activity in the manufacturing sector, consistent with the trends in electronics and machinery exports.
In the service sector, indicators excluding gold trading and adjusted for seasonality remained stable compared to the previous month. Activity in the tourism sector declined in passenger transport businesses, including hotels and restaurants, consistent with the decrease in the number and revenue of foreign tourists. However, activity in the trade sector improved, driven by increased spending on consumer goods as a result of government measures and increased sales of electric vehicles.
Farmers' income expanded compared to the same period last year, driven by continuously rising agricultural commodity prices, particularly rubber prices, which increased due to concerns about the El Niño phenomenon expected to impact production in the coming period. In addition, palm oil prices rose due to higher demand for biodiesel production, coupled with reduced domestic palm oil production resulting from drought and hot, dry weather in the early part of the year, as well as a high base effect from the previous year.
Overall, the financial conditions and fundraising of the business sector increased from the previous month, mainly driven by net loan-based fundraising. Net loan-based fundraising increased primarily from holding companies in the transportation, petrochemical, and energy utilities sectors. Meanwhile, fundraising through the capital market increased slightly from the software, retail, and wholesale machinery businesses.
While fundraising through the bond market decreased due to businesses in the financial, food and beverage, and information technology sectors, the cost of fundraising through bonds in July 69 (data up to July 24, 69) remained stable, with short-term Thai government bond yields staying stable.
While long-term bond yields edged slightly higher, in line with the direction of US government bond yields and those of major economies, and global oil prices rose due to concerns about renewed tensions in the Middle East in early July.
The Thai baht's exchange rate against the US dollar in June and July 69 weakened on average, mainly due to the strengthening of the US dollar. In June 69, the baht depreciated following the US Federal Reserve's (Fed) monetary policy statement, which reflected a hawkish outlook and the possibility of interest rate hikes in the second half of the year.
In July 69 (data up to July 24, 69), the Thai baht weakened due to risk-off sentiment among investors following renewed tensions in the Middle East. The average Effective Exchange Rate (NEER) index for June and July 69 showed a slight decrease, reflecting the baht's weaker performance compared to trading partners and competitors. This is due to market concerns that the Thai economy will be impacted by recently rising oil prices.
Regarding economic stability.
The overall inflation rate decreased from the previous month, mainly driven by a decline in the energy category due to lower global crude oil prices. This was compounded by a decrease in the fresh food category, with lower meat prices resulting from increased production, and lower vegetable prices due to a high base effect from the previous year. Meanwhile, core inflation increased in several product categories, particularly personal care products and processed foods, as businesses gradually passed on their costs.
Regarding the labor market, overall employment remained stable, reflected in the number of insured persons under Section 33, which was similar to the previous month. However, employment in certain manufacturing sectors needs to be closely monitored, especially those facing pressure from higher costs resulting from the conflict in the Middle East and intense competition from imported goods.
However, regarding the situation of factory openings and closures in the first half of the year, the number of closures increased, particularly in the real estate sector. Meanwhile, some manufacturing sectors continue to face pressure from various factors, including high production costs, uncertainty in geopolitical conflicts in the Middle East, and competition from imported goods, resulting in a net negative number of factory openings and closures.
A key issue to monitor is the impact on employment in the coming period, as most newly opened factories exhibit investments that prioritize capital and technology over labor, which could become a constraint on job growth.
The current account deficit narrowed from the previous month, driven by improvements in the services, income, and transfers balances following the end of the profit and dividend repatriation period. Meanwhile, the trade balance remained in deficit at a similar level to the previous month, despite a gradual decrease in fuel imports. This decline was primarily due to accelerated gold imports resulting from a significant drop in global gold prices.
