BANGKOK, Thailand – Thailand’s economy is expected to expand at a slower pace in the second half of 2026, with recovery remaining fragile as external pressures, weaker government support, and rising global uncertainties weigh on growth, according to SCB Economic Intelligence Center (SCB EIC).
The research unit said economic conditions showed some improvement in June after pressure from the Middle East conflict eased temporarily. Consumer, business, and industrial confidence indicators improved, particularly expectations for future conditions. However, SCB EIC warned that confidence has not yet returned to pre-crisis levels, while renewed tensions in the Middle East and rising energy prices could create additional pressure in the months ahead.
Exports, investment, and tourism have continued to provide some support, with recovery seen among Middle Eastern and European visitors affected by earlier regional tensions. However, the improvement could weaken if geopolitical risks intensify again. SCB EIC expects the fourth quarter to be a particularly important period, with government stimulus measures losing momentum while external risks could increase pressure on trade and production costs.
Major risks include the impact of US Section 301 tariffs, including a potential additional 12.5% tariff linked to forced labor concerns, further investigations into excess production capacity, and the possibility of a “Super El Niño” affecting agricultural output and raising fertilizer costs. Government measures are expected to help support the economy in the short term. Cash support programs and other assistance measures may help maintain consumer spending in the third quarter, while plans involving energy transition investment could provide longer-term support. However, SCB EIC noted that fiscal space is becoming more limited, with the 2027 budget showing only modest growth and investment spending declining from the previous fiscal year.
Energy measures, including fuel price support through the Oil Fuel Fund and efforts to manage electricity costs, are also expected to help reduce pressure on households and businesses.
The Bank of Thailand’s Monetary Policy Committee (MPC) is expected to keep the policy interest rate at 1% throughout the year, with inflation still largely driven by external factors such as global energy prices. SCB EIC said monetary policy remains focused on supporting economic recovery, particularly as households and small and medium-sized enterprises continue facing tight financial conditions. Globally, economic growth is expected to remain under pressure from renewed Middle East tensions and US trade policies. SCB EIC maintained its global growth forecast at 2.5% for 2026 but warned that downside risks have increased.
The center said the US economy continues to receive support from artificial intelligence investment and stable employment, while China faces weaker domestic demand and continues relying heavily on manufacturing and exports. Japan is expected to benefit from wage growth and electronics exports, while the eurozone continues to face weak manufacturing conditions. SCB EIC said global financial conditions are likely to remain tight, with major central banks maintaining cautious policies to control inflation risks, particularly if energy prices rise again due to geopolitical tensions.
