Thailand is seeing a tightening of consumer spending as economic growth slows and concerns mount over rising household debt and global trade tensions, particularly during the typically quiet second quarter of the year.
Empty markets and muted commercial activity in tourist hubs across Thailand reflect a broader slowdown in consumer spending. Despite a 3.1% year-on-year economic expansion in the first quarter of 2025, the National Economic and Social Development Council (NESDC) recently revised the country’s full-year growth forecast downward to 1.8% from an earlier 2.8%, citing persistent risks and calling for more prudent household spending.
The NESDC’s warning has rippled across key sectors, particularly housing. The high cost of home ownership, coupled with stricter mortgage lending criteria and changes in income assessment by banks, has led to a rejection rate exceeding 50% for mortgage applications in early 2025. Kessara Thanyalakpark, managing director of Sena Development, noted that the residential market is already contracting, as potential buyers grow hesitant to commit to long-term debt.
In the automotive industry, carmakers are also facing challenges. Mercedes-Benz (Thailand) chief executive Martin Schwenk said consumer caution has increased, citing tightened loan approvals and household debt as primary deterrents. According to the Federation of Thai Industries, domestic vehicle sales dropped by 4.8% year-on-year from January to April, with pickup trucks and passenger cars seeing the steepest declines.
The banking sector has not been immune to the broader economic strain. Kasikorn Research Center expects overall loan growth to slow to just 0.6% in 2025, with auto loans projected to shrink by 7.5%. Mortgage growth is predicted to remain marginal at 0.5%. The first quarter already saw a 10.2% plunge in auto loans and a 1.3% contraction in total bank lending, as reported by the Bank of Thailand.
Fuel demand, typically tied closely to economic activity, has also softened. PTT Oil and Retail Plc (OR) expects weaker performance in its fuel segment despite modest growth in overall fuel consumption. The company is taking steps such as inventory management and cost reduction to mitigate potential losses from falling crude prices, which are forecast to stay between $50–70 per barrel in 2025.
In consumer goods, Kamol Pork, a retail pork distributor, reported a noticeable drop in both order frequency and sales value, particularly from restaurant clients. The downturn in disposable income is prompting consumers to switch to ready-to-cook options and reduce bulk purchases.
The uniform industry has experienced similar effects. According to Nomjitt Manufacturing Co, a school uniform supplier, parents are delaying purchases and opting to reuse existing items as household budgets tighten at the start of the academic year.
Still, certain sectors show resilience. Eveandboy Co, a beauty retail chain, noted continued growth despite the slowdown, attributing consumer spending in this category to emotional and lifestyle influences rather than economic conditions.
In Chiang Mai, tourism—a crucial economic driver—has slowed significantly. Hotel occupancy rates dropped below 40% in May, compared with over 50% in typical years. Domestic tourism is down, and hoteliers are waiting for government stimulus measures to boost demand. Meanwhile, vendors and agricultural producers in the region report fewer sales, with reduced Chinese tourist numbers having a notable impact on spending.
A broad array of sectors—including housing, banking, retail, automotive, and tourism—are grappling with reduced consumer spending. While officials and industry leaders such as Kessara Thanyalakpark of Sena Development, Martin Schwenk of Mercedes-Benz Thailand, and Pitirat Rattanachote of PTT OR acknowledge sector-specific challenges, all point to a common cause: cautious consumer behavior amid economic uncertainty.
