People shop at a market in Bangkok, Thailand, August 24, 2025. REUTERS/Athit Perawongmetha

By Rahul Trivedi

BENGALURU (Reuters) -Thailand's economic growth likely slowed sharply last quarter as weak household spending and ongoing domestic uncertainty offset gains from exports, a Reuters poll of economists showed.

Weighed down by high debt and fragile confidence, private consumption - a key driver of economic growth - has taken a beating. Central bank data showed spending contracted 0.2% in July and 0.8% in September, and was flat in August.

Southeast Asia's second-largest economy expanded 1.6% year-on-year in the July-September quarter, down from 2.8% in the second quarter, according to a November 10–13 survey of 14 economists.

On a quarter-on-quarter, seasonally adjusted basis, gross domestic product (GDP) likely contracted 0.3%, following a 0.6% expansion in April–June, the poll showed.

"I think the drag on the economy remains private consumption," said Poon Panichpibool, markets strategist at Krung Thai Bank, adding that high household debt remains a major problem.

To ease that burden, the government plans to buy back 122 billion baht ($3.7 billion) of small loans from 3.5 million borrowers in phases starting early next year.

While domestic challenges persist, exports are a bright spot. They surged 19.0% in September from a year earlier - the fastest rate in more than three years - with shipments to the United States jumping 35.3%.

Krung Thai's Panichpibool said exports stayed strong thanks to robust demand for electronics and semiconductors used in artificial intelligence (AI). "It has surprised analysts because we earlier expected that once it had passed the period of front-loading, it could lead to a fall in export growth."

Reflecting that resilience, the Bank of Thailand (BOT) last month raised its 2025 export growth forecast to 10% from 4% projected in June, saying the impact of U.S. tariffs was milder than expected.

The broader outlook has dimmed, though. A separate Reuters poll showed the economy would grow 2.0% this year and 1.8% next, compared with the central bank's forecasts of 2.2% and 1.6%, respectively. Fitch Ratings revised the country's outlook to "negative" from "stable".

"Despite the introduction of additional government stimulus, a downturn in Chinese tourist arrivals, higher U.S. tariffs and weak investment will all weigh on the economy going forward," Gareth Leather, senior Asia economist at Capital Economics, said.

To support growth, policymakers at the BOT have left the door open for rate cuts, while the government plans to spend $1.4 billion on consumer subsidies and other stimulus. But some economists doubt the effectiveness of such measures.

"Thailand's chronic political instability has pushed policymakers towards populist fixes with structural obstacles ... unaddressed. The danger is that the next government will continue down the same path, neglecting the deeper reforms that the Thai economy desperately needs," Leather said.

($1 = 32.7500 baht)

(Reporting by Rahul Trivedi; Polling by Vijayalakshmi Srinivasan; Editing by Andrew Heavens)