Thailand's Consumer Confidence Plunges to 27-Month Low Amid Trump Trade War Fears
Fourth consecutive monthly decline signals potential recession risk as businesses and consumers grapple with trade war anxieties and sluggish recovery
Consumer confidence in Thailand has tumbled to a 27-month low, sparking fears of an impending recession as the kingdom grapples with concerns over protectionist trade policies and economic stagnation.
The Consumer Confidence Index (CCI) fell from 55.4 in April to 54.2 in May—its fourth consecutive monthly decline—according to a nationwide survey of 2,242 individuals conducted by the University of the Thai Chamber of Commerce (UTCC).
The index now sits at its lowest point since March 2023, with other key economic indicators also experiencing sustained declines.
The Overall Thai Economic Confidence Index dropped to 48.1, whilst the Employment Opportunity Confidence Index fell to 51.9 and the Future Income Confidence Index declined to 62.7.
Trade War Anxieties Drive Pessimism
Thanavath Phonvichai, president of the UTCC and chief adviser to the Centre for Economic and Business Forecasting, attributed the persistent decline to mounting public apprehension over potential trade conflicts stemming from "Trump 2.0" policies.
"The Consumer Confidence Index falling for the fourth consecutive month suggests we are in a downturn and at risk of entering a recession," Thanavath warned. "This reflects how easily consumer confidence could tip into a recession."
The concerns persist despite government stimulus measures implemented in the first quarter and two policy interest rate cuts by the Bank of Thailand totalling 0.5 percentage points since the beginning of the year.
However, consumers perceive the economic recovery as sluggish and report difficulties accessing credit.
Negotiation Deadline Looms
Thailand faces mounting pressure as it approaches a critical 7th July deadline for trade negotiations with the United States.
Deputy Prime Minister and Finance Minister Pichai Chunhavajira has announced scheduled talks, though uncertainty remains over whether a resolution can be reached within the 90-day grace period.
Thanavath noted that no country, including China, has yet achieved a conclusive negotiation outcome with the US administration.
Should the world enter a phase of "reciprocal tariffs," Thailand's economy could suffer significant damage, with export values and tourism potentially declining by an estimated 150-200 billion baht.
Deflation Risks Emerge
Adding to economic woes, the Commerce Ministry has projected a potential negative inflation rate for the second quarter of 2025, signalling technical deflation risks.
Whilst the negative headline Consumer Price Index is primarily attributed to falling energy and fresh food prices, core inflation also remains low, indicating weakened purchasing power.
Businesses have echoed consumer concerns, with the Thai Chamber of Commerce Confidence Index falling for the third consecutive month to 48.0 in May.
Entrepreneurs are pressing the government to implement economic stimulus measures to boost purchasing power and provide liquidity support.
Growth Projections Dim
The UTCC estimates Thailand's economy will grow by just over 1% in the second quarter, leading to approximately 2% growth for the first half of 2025.
However, if growth cannot be sustained at 2% in the second half, overall annual growth will certainly fall below this threshold.
The projection for 2025 remains between 1.5-2%, though there is risk of even lower growth if the US rigorously applies reciprocal tariffs across all countries.
Urgent Action Needed
Thanavath emphasised the critical need for swift government intervention, particularly the rapid implementation of a 175 billion baht stimulus budget to drive economic activity in the third and fourth quarters.
He also called for relaxed financial measures, including further interest rate reductions and debt restructuring, alongside accelerated tourism promotion. Thailand targets 35 million international arrivals this year, with particular focus on attracting Chinese tourists.
However, political developments pose additional risks. Should parliament be dissolved, the drafting of the 2026 annual budget bill could face delays of 6-9 months, whilst 1.75 billion baht from stimulus projects would become inaccessible under a caretaker government.
The confluence of trade war fears, credit constraints, and political uncertainty has created a perfect storm that threatens to push Thailand's economy into its first recession in years, with consumers and businesses alike bracing for turbulent times ahead.
