BANGKOK, Thailand – Kasikorn Research Center has maintained its forecast for Thailand’s economic growth at 2% in 2026 despite renewed tensions in the Middle East pushing Brent crude oil prices above US$100 a barrel. Nattaporn Treeratthasirigul, Deputy Managing Director of Kasikorn Research Center, said the Thai economy is expected to slow in the second half of the year compared with the first six months, mainly because exports are likely to weaken after strong growth earlier in the year. Private consumption is expected to receive support from the government’s “Thai Help Thai Plus” stimulus measures, particularly during the third quarter, although underlying household purchasing power remains weak.
Private investment, particularly foreign direct investment (FDI), is expected to remain a major driver of the economy and continue into 2027. However, many investments are still in their early stages and require significant imports of machinery and equipment. This is expected to contribute to a trade deficit this year and put pressure on the current account.
On monetary policy, Kasikorn Research expects the Bank of Thailand’s Monetary Policy Committee to keep the policy interest rate at 1% throughout 2026. The research center forecasts the baht at around 33.80 baht to the US dollar.
Domestic commercial bank lending is expected to grow only modestly, with overall loan growth forecast at 0.5% year-on-year in 2026. Lending to large businesses is expected to maintain growth above 5%, while the recovery remains less evident among small and medium-sized enterprises.
Retail lending is also being affected by efforts to reduce household debt relative to GDP. Meanwhile, non-performing loans in the banking system could rise slightly from 2.76% of total loans at the end of the second quarter, moving toward the projected range of 2.80–3.00% by the end of the year.
Kasikorn Research said other government measures, including the “Thai Travel” programme and a 50-billion-baht energy transition budget funded through a 200-billion-baht emergency borrowing decree, are expected to begin having an economic impact in the fourth quarter, with clearer results in 2027.
The energy transition programme is aimed at supporting longer-term economic development, including measures such as promoting rooftop solar installations. Another risk to the economy is the possible return of El Niño, which could push up vegetable and fruit prices during the fourth quarter and put upward pressure on inflation. However, Kasikorn Research expects full-year inflation to remain below 2%.
The research center is also monitoring the impact of US trade measures, including possible changes related to Section 301. Thailand could face an increase in tariffs from 12% to 12.5%, although the impact may remain limited if Thailand can maintain its competitiveness against regional competitors such as Vietnam.
Thai auto industry faces major transition
Rujiphan Assarat, Assistant Managing Director of Kasikorn Research Center, said Thailand’s automotive industry is approaching a major turning point, with domestic vehicle production expected to decline while imports continue to expand.
Battery electric vehicles (BEVs) accounted for 72% of the value of all vehicle imports into Thailand during the first seven months of 2026, highlighting the rapid shift in consumer demand and the growing role of imported electric vehicles. The government is considering measures to encourage the Thai automotive industry to move toward greater domestic production of environmentally friendly vehicles, including both BEVs and hybrid vehicles.
Excise tax incentives could encourage manufacturers to shift from importing vehicles toward producing them in Thailand and using more locally sourced components. The aim is to retain more value within the Thai economy while supporting the country’s automotive manufacturing base.
However, Kasikorn Research said the success of the measures will depend heavily on how effectively Thailand sets and monitors requirements for domestic value-added components.
If the measures achieve their intended results, vehicle production in Thailand could return to growth in 2027, with output forecast to increase by 4.9%, following an estimated contraction of 1.8% in 2026. The outlook highlights the broader transition facing Thailand’s economy as weaker exports and household purchasing power are offset by foreign investment, government measures and the restructuring of major industries for longer-term growth.
