Bangkok: Krungsri Research has revised its forecast for Thailand's economic growth in 2026 upwards to 2.1%, up from a previous estimate of 1.9%. This growth is projected to be bolstered by private sector investment, exports, and government measures, which are expected to sustain economic momentum in the latter half of the year. However, several challenges, including geopolitical tensions, potential US trade protectionist measures, the risk of El Ni±o, and domestic structural limitations, could dampen overall economic progress.
According to Thai News Agency, although Thailand's economy slowed to 1.9% in the second quarter of 2026 compared to the same period last year, the impact of the Middle East conflict posed challenges to the Thai economy, affecting private consumption, government spending, and tourism sectors. Additionally, accelerated imports led to a current account deficit for the first time in eight quarters. Despite these hurdles, the economy performed better than expected in the second quarter, primarily due to the expansion of exports and private investment, along with inventory accumulation.
For the second half of the year, Krungsri Research anticipates continued momentum in private sector investment, supported by investment promotion applications from the Board of Investment (BOI) and foreign direct investment (FDI). Economic policies such as the Thailand FastPass project are expected to further accelerate actual investments.
In terms of exports, sectors related to AI investment and electronics are predicted to continue growing. However, overall export growth may slow due to weaker global demand and potential increases in US trade protectionist measures, including heightened import tariffs. The tourism sector is expected to undergo a gradual recovery, with improving tourist numbers from China and the Middle East signaling early signs of recovery, despite high travel costs.
Private consumption is projected to decelerate in the final quarter of the year, despite initiatives like the "Thai Travel Plus" campaign. The campaign's budget is significantly lower than previous initiatives, and factors such as high living costs, potential El Ni±o impacts on agricultural income, and persistent household debt pressure purchasing power.
Regarding monetary policy, the Monetary Policy Committee (MPC) is anticipated to maintain the policy interest rate at 1.00% per annum for the rest of the year. Even if inflation exceeds the target range in the last quarter, it is expected to return to the target by mid-2027 due to sub-potential economic growth and insufficient domestic demand recovery. Credit growth, especially among SMEs, remains weak, prompting monetary policy to continue supporting financial conditions and economic recovery.
Dr. Pimnara Hirankasit, Head of Economic Research at Krungsri Bank, stated that the revised economic forecast reflects several factors: better-than-expected second-quarter growth driven by private sector investment and exports, government measures like energy transition projects and the Thailand FastPass program, and the anticipated impact of the El Ni±o phenomenon on agricultural production.
Looking forward, the Thai economy faces challenges such as prolonged Middle East geopolitical tensions, uncertainties over US trade protectionist measures, fiscal constraints, and structural issues like declining manufacturing competitiveness, high household debt, and a transition to an aging society with a shrinking labor force. Effective economic policies addressing these structural problems, while maintaining policy flexibility, are crucial for sustaining Thailand's economic momentum in the coming years.