CHIANG RAI — Weekend tourism still brings life to the Kok River valley. Cafés, tea farms, and cross-border routes to Lao PDR and Myanmar stay busy. Beneath the green travel image, August data flashed a warning. Demand-side indicators fell across the board. Border trade plunged 66.9%, reversing from a 2.5% rise in July, according to Nakorn Chiang Rai.
The latest provincial fiscal report says it plainly: the economy contracted year over year and month over month. Supply-side output held up, thanks to services and agriculture. Yet weak spending by government, households, and investors is dragging on business sentiment and family budgets.
Border activity usually powers Chiang Rai. It moves farm goods, light industry, and energy. In August 2025, exports through customs declined to 4,748.5 million baht, representing a 71.5% decrease. Imports fell to 2,019.4 million baht, down 46.7%. The trade balance showed a surplus of 2,729.1 million baht. It was not a sign of strength. Both export and import flows shrank, with exports collapsing faster from a fast-declining base.
Fragile export items included fresh fruit, fuel, vehicles, and palm olein. Imports fell in fresh fruit and vegetables, flowers, animal feed, corn, and antimony ore. The picture points to tighter external conditions, from border rules to weak regional demand. Local supply chains that rely on cross-border trade took the hit.
Public Outlays Slow, Private Sector Turns Cautious
All three demand engines slipped at once.
- Government spending fell 3.9% in August, down from plus 18.6% in July. The main drag came from capital spending, down 24.5%. Highway, irrigation, university, and hospital projects slowed, choking the flow of funds to the province.
- Private investment contracted 2.7%, a slight improvement from 3.7% in July. A sharp drop in permitted construction area, down 45.1% in August and down 39.1% year to date, shows low confidence in future demand.
- Investment credit remained negative at 0.7%. Banks stayed risk aware. Households also played it safe. Deposits rose 5.5% while total loans slipped 0.7%. Caution spread across sectors.
Even so, private consumption still grew 2.9%, though slower than in July. Bright spots included new passenger car registrations, up 5.2%, liquor sales, up 16.4%, and household electricity use, up 6.3%. Families kept spending in select categories, such as durables and essentials.
Supply side: services and farms hold the production base
While spending was weak, output still grew year over year. Chiang Rai’s economy relies on services for 64.8% of GPP.
- Services rose 7.3% on tourism and events, such as the Patumma Festival, TEDx ChiangRai, and the Miracle of Ethnicities, Colours of Lanna. Tourist arrivals increased 8.7%. Wholesale and retail revenue rose 14.7%. VAT from hotels and restaurants increased 6.6%. Tourism kept the wheels turning.
- Agriculture grew 2.6%. Weather and water conditions helped. Tea output jumped 113.3%. Longan production increased 5.0%. Tilapia, swine, and cattle also expanded.
- Industry slipped 1.4%. Industrial electricity use fell 5.9%. Orders have not recovered.
Bottom line, services and agriculture supported supply, but weak external demand, border trade, and investment held back recovery.
Why farmers produced more yet earned less
The farm income index fell 13.7% in August. The drop came despite higher output for several crops. The main reason was a steep fall in prices, down 15.9%.
- Rubber, down 12.0% (49,130 baht per ton)
- Tea, down 49.4% (13,660 baht per ton)
- Longan, down 61.7% (11,500 baht per ton)
- Pineapple, down 5.2% (12,800 baht per ton)
When yields rise and prices drop, net income falls. Oversupply and weak price support hit farm households. Cross-border frictions added to logistics and export market challenges. The fix needs system-level tools, not only short relief.
Stability signals: mild deflation, weaker hiring
- Headline inflation was minus 0.9% in August, vs. minus 0.3% in July. Fresh food, rice and flour, eggs, fruit and vegetables, and transport and communications pulled prices down.
- Employment fell 3.7%, showing slower hiring as firms paused projects and expansion.
Deflation eases some living costs but is a poor signal if it lasts. It reflects weak demand and can lead to more cuts in hiring and investment.
Local fiscal pulse: revenue held up, capital outlays must speed up
August revenue collection reached 315.9 million baht, up 6.8%. Area revenue from the Revenue Department rose 7.1% on VAT and income tax. Excise rose 10.8% on beverages and alcohol. Customs fell 9.7% with slower border trade.
Total disbursement was 1,100.8 million baht, down 3.9%, due to lower capital spending. Highway, irrigation, health, and education agencies disbursed slowly. Fiscal year to August, capital disbursement reached 57.4%, below the 80% year-end goal. Agencies need to lock in contracts and clear procurement in the final quarter.
Stimulus that reaches locals: 3.49 billion baht injected, 0.67% of GPP
Two government programs supported spending this fiscal year. The Chiang Rai Provincial Treasury Office estimated multiplier effects as follows.
- State Welfare Top-up 2025
- Beneficiaries: 329,586 people
- Funds injected: 758.05 million baht
- Five-year economic impact: 1,027.91 million baht, equal to 0.19% of Chiang Rai GPP, multiplier 1.356
- Impact on national GDP: 0.07%
- Khon La Khrueng Plus
- Beneficiaries: 650,606 people
- Taxpayers: 169,357 people, 4,800 baht each
- Non-taxpayers: 481,249 people, 4,000 baht each
- Funds injected: 2,737.91 million baht
- Five-year economic impact: 2,592.80 million baht, equal to 0.48% of Chiang Rai GPP, multiplier 0.947
- Impact on national GDP: 0.22%
Combined, net funds of 3,495.96 million baht produced 3,620.71 million baht in economic impact. That equals 0.67% of Chiang Rai GPP and 0.29% of national GDP. These programs cushion demand while private firms hold back, and border activity slows.
(Data: Chiang Rai Provincial Treasury Office)
Policy meaning, with external demand weak, targeted household support buys time. It helps services, tourism, and retail keep moving, and gives the public sector room to clear investment bottlenecks.
Five signals for businesses to watch
- Border shock, border trade down 66.9%, exports down 71.5%, imports down 46.7%. Exporters, logistics, and warehousing should plan for a longer dp, and seek new markets and routes.
- Public capex gap, government capital spending down 24.5%. Contractors and consultants must track agency disbursement plans and join efforts to accelerate procurement.
- Private prudence, construction permits down 45.1% in August, down 39.1% YTD, and investment credit down 0.7%. Property and building materials firms should manage cash and inventories.
- Service safety net, services up 7.3% and tourist arrivals up 8.7%. Hotels, restaurants, and event operators still have room to earn, especially in the year-end festive season.
- Farm income squeeze, farm incomes down 13.7% on prices down 15.9%. Co-ops and processors should pursue forward contracts, value-added processing, and e-commerce to reduce price pressure at the farmgate.
Three supports to set in place before peak season
- Restore border trade flows
Two-thirds of the border trade value went missing in August. Domestic activity cannot fully replace it. At the policy level, speed up border facilitation, align inspection standards, and run technical workshops with neighbours. Create special lanes for perishable goods. Match local exporters with buyers in Lao PDR, Myanmar, and Yunnan. - Accelerate public investment and clear procurement jams
With capital spending stuck, use daily tracking for lead agencies, including Highways, Irrigation, Rural Roads, Hospitals, and Universities. Publish a weekly disbursement roadmap through Q4. Aim to lift capital disbursement to 80% byyear’sr end, and pass the multiplier to the private sector. - Protect farm incomes and move surplus to market
When volumes rise and prices fall, market tools matter.
- Forward sales or price insurance for tea and longan
- Divert produce to tourism channels and regional hubs, plus online sales
- Back processing and GI or Organic standards to break the raw commodity trap
Reading the fiscal data the right way
Revenue rose 6.8% in August, led by VAT, income tax, and excise on beverages and alcohol. Customs fell 9.7%. Recovery leaned toward domestic activity, not border flows. Strong domestic taxes are not a reason to slow border support. Use that strength to front-load capital projects and rebuild missing demand.
Looking ahead: winter, festivals, and policy to the rescue
Peak travel season is starting. It pairs with household support from State Welfare and Khon La Khrueng Plus. The expected injection is 3.49 billion baht with a 3.62 billion baht multiplier, equal to 0.67% of Chiang Rai GPP. If border issues linger, these supports can hold the line, but they will not push the economy to a smooth run. Border and product-specific measures need to move in parallel.
(Source: Chiang Rai Provincial Treasury Office, multiplier infographic)
Action checklist for policymakers, businesses, and communities
- Borders and logistics: set up a task force to fix choke points, upgrade documentation standards, and share data in real time with neighbours.
- Public capex: launch a public dashboard for disbursements by agency and project, and link to KPIs.
- SMEs and tourism: package tours, events, and travel reasons through Q4, including city-to-city routes and secondary cities.
- Agriculture: expand forward contracts, seasonal credit, price insurance, and vouchers for processing and packaging design.
- Workforce: fast-track training in services, digital skills, and logistics to fit real job demand and prevent hidden unemployment.
The big picture
- Production, led by services and farms, still has some oxygen.
- Spending is under pressure from a border shock of 66.9% and a capex gap, which hit private investment.
- Households keep spending in select areas, while deposits rise and credit slips.
- Farmers produce more yet earn less as prices fall, tied to border trade hurdles.
The way out is clear. Reopen border trade channels, speed up public investment, protect farm incomes, and support household demand. Once confidence returns, the private sector can shift up a gear.
Chiang Rai is skilled at turning festivals into income and scenery into the real economy. If borders flow, capex moves, and crop prices stabilize, the next report could show a far better balance.
