Monthly economic update: September 2025
Executive summary
Global Economy
- In September 2025, the global economic data point to emerging signs of weakness, particularly from the US and China, where several economics indicators have fallen short of market expectations — suggesting a possible further slowdown in the coming months. On price pressures, inflation remained contained across both DM and EM, despite a gradual upward trend observed in some DM economies.
- US economic fragility is rising amid a slowing labor market, though consumption remains resilient. Meanwhile, China’s August economic data show signs of further slowdown, raising concerns about meeting the public GDP target and increasing demand for additional stimulus.
- For monetary policy, The Fed delivered its first rate cut of the year, aligning with other central banks already in the midst of their easing cycle.
Domestic Economy
- In July 2025, Thai economy continued to soften from the previous month. Despite industrial production improved, supported by strong merchandise exports, private consumption remained broadly stable. Private investment declined, primarily due to reduced spending on machinery and equipment. Moreover, foreign tourist arrivals was relatively stable compared to last month.
- The headline inflation (CPI) showed a deeper contraction than the previous month in August 2025. The main factors came from the falling prices of fresh food items, particularly fresh vegetables, fresh fruits and eggs due to higher supply. Moreover, the energy prices also further declined following the global energy prices including electricity price regarding to government subsidy measures.
- In the second quarter of 2025, the commercial banks’ loan contracted at a slower pace, driven by continued contraction in SME and consumer loans amid heightened credit risks, while large corporate loans continued to expand. Overall credit quality was slightly improved consistent with ongoing debt deleveraging from COVID support measures.
Financial Market
- US bond yields continued to decline in a bull steepening move, driven by a sharp drop in short-term rates after the Fed delivered its first rate cut of the year. In Thailand, the yields curve overall continued to decline compared to the previous month.
- The Dollar weakened over the month on expectations of a Fed rate cut in September. However, it rebounded post-meeting as Powell struck a less dovish tone and recent economic data surprised to the upside. Meanwhile, the Thai baht outperformed regional peers this month, supported by record-high gold prices. The baht briefly strengthened past the 32.00 level, prompting concerns from the Bank of Thailand and the government.
