Consumer spending tightens

As the Thai economy stagnates and tourist destinations become hushed, individuals are more careful with their purchases, write Kanana Katharangsiporn, Lamonphet Apisitniran and Somruedi Banchongduang

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Quiet tourist attractions with fewer guests and complaints from local merchants about stagnant purchasing power have become more pronounced, as the Thai economy braces for another slump in the second quarter, which is typically a low season for spending.

The economic growth forecast has been consistently downgraded this year, including the latest announcement from the National Economic and Social Development Council (NESDC) last week, which revised the 2025 projection down to 1.8% from 2.8%.

Despite an economic expansion of 3.1% year-on-year in the first quarter, the NESDC warned people should be cautious with their spending to brace for the impact of a slowdown going forward.

NO HOPE, NO HOME

Given the NESDC prodding about belt-tightening, the housing market is likely to be affected by the economic slowdown, as buying a home involves a significant investment and long-term debt.

Kessara Thanyalakpark, managing director of SET-listed Sena Development, said homebuyers are driven by real demand, whether they are young professionals just starting their careers or families looking to settle down.

"Purchasing a home, one of life's four basic necessities, is particularly prone to economic concerns and rising household debt," she said.

"When consumer sentiment is weak, people don't want to buy anything, and that includes homes. Few are willing to take on 30 years of debt in times like these."

Ms Kessara said the residential market is expected to contract this year in line with the economic slowdown.

In the first quarter of 2025, before the earthquake and the NESDC's warning, the average bank mortgage rejection rate soared to more than 50%.

"The NESDC's warning about consumer spending reflects the reality," she said. "The housing market has been affected by banks tightening mortgage lending criteria."