What To Know
- The World Bank recently issued a warning that both economies are facing prolonged periods of subdued inflation, a situation that could stall growth and dampen investor confidence.
- According to the latest East Asia and Pacific Economic Update (October 2025) from the World Bank, inflation in most economies across the region remains within acceptable ranges.
Bangkok Business News: Economic Clouds Gathering Over the Region
Thailand’s economy is showing increasing signs of strain as deflationary pressures intensify, echoing similar trends in China. The World Bank recently issued a warning that both economies are facing prolonged periods of subdued inflation, a situation that could stall growth and dampen investor confidence. Thailand’s consumer price index (CPI) has dropped for six consecutive months, registering a 0.72% year-on-year decline in September 2025 — the lowest in the ASEAN region. Officials maintain that the downturn represents a slowdown under low inflation rather than outright deflation, yet concerns are mounting over the broader implications.
Thailand’s inflation continues to slide as the World Bank warns of rising deflation risks across East Asia, impacting both trade and growth outlooks.
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According to the latest East Asia and Pacific Economic Update (October 2025) from the World Bank, inflation in most economies across the region remains within acceptable ranges. However, this Bangkok Business News report highlights that Thailand and China stand out as exceptions, both teetering on the edge of deflation. Economists warn that such a prolonged drop in prices can undermine business profits, delay consumer spending, and trigger a downward economic spiral.
China’s Exports Add to the Pressure
The World Bank emphasized that China’s deflation is partly driving the export of cheaper goods to regional markets. While this helps lower import costs for countries like Thailand, it also hurts local industries that struggle to compete with the influx of low-priced Chinese products. The effect has been a double-edged sword — stabilizing consumer costs but simultaneously eroding domestic competitiveness. Furthermore, with interest rates in several regional economies exceeding those in advanced markets, capital inflows have strengthened currencies like the baht, putting additional pressure on exporters.
Thailand’s Officials Offer a Cautious Outlook
Government officials have sought to clarify that Thailand is not yet in full-blown deflation. They argue that although headline inflation has been negative for six months, core inflation remains positive, suggesting continued domestic consumption. Employment levels have remained stable, and GDP growth, though modest, continues. Officials attribute the weak inflation mainly to subdued energy and food prices rather than a complete collapse in demand.
To stimulate spending, authorities are banking on fiscal measures such as co-payment programs and tourism-driven stimulus campaigns. While these policies are expected to lift consumer sentiment gradually, they are unlikely to drive inflation significantly higher. Food and energy, which together make up nearly 30% of Thailand’s inflation basket, remain key variables in determining future trends.
Regional Standing and Economic Outlook
As of August 2025, Thailand’s headline inflation stood at –0.79%, the ninth lowest among 140 economies worldwide and the lowest among ASEAN nations. This status underscores both the resilience and the fragility of the Thai economy. With the World Bank urging regional governments to act decisively, Thailand’s policymakers face a delicate balancing act — sustaining growth without slipping into a deflationary trap. Their next steps will be crucial in determining whether the current slowdown can be reversed before it takes a deeper toll on employment and long-term recovery.
For the latest on the Thai economy, keep on logging to Bangkok Business News.
