The Global and Thai Economies Amid the Uncertainty of the Middle East War
SCB EIC assesses that, under its base case of an average Brent crude oil price of USD 75/bbl this year, Thailand’s economy may grow 0.3 pp more slowly
Under the base case, SCB EIC assesses that shipping through the Strait of Hormuz will be disrupted for 2–6 weeks.
Under the base case, some energy infrastructure will be attacked, and Iran will close the Strait of Hormuz for 2–6 weeks, resulting in the average Brent crude oil price rising to USD 75/bbl.
If the conflict escalates into a regional war, disrupting energy transportation across the region to be disrupted, the average Brent crude oil price could rise significantly to USD 107/bbl.
The global economy faces downside risks from the war in the Middle East.
Under the base case, in which Brent crude averages USD 75/bbl this year, global inflation would rise by around 0.4 percentage points (pp), while global GDP could decline by around 0.2–0.4 pp.
Rising inflationary pressures may lead major central banks to delay further monetary policy easing. The U.S. Federal Reserve may adopt a more cautious wait-and-see approach and postpone policy rate cuts amid heightened inflation risks, in addition to the effects of higher global import tariffs.
Thailand’s economy in 2026 may grow 0.3–0.8 pp more slowly, while inflation may return to the target range sooner.
SCB EIC assesses that, under the base case in which the average Brent crude oil price rises to USD 75/bbl this year, Thailand’s economy may expand 0.3 pp more slowly. Under the worst-case scenario, the average Brent crude oil price may reach USD 107/bbl, and Thailand’s economy may slow by as much as 0.8 pp.
Thailand’s inflation in 2026 is likely to rise to 1.5%, returning to the 1–3% target range sooner as a result of rising global energy prices. However, if the situation escalates into a regional war, inflation could rise to above 4%.
SCB EIC assesses that the Monetary Policy Committee (MPC) may have room to further ease the policy interest rate in response to risks arising from the war in the Middle East.
The business sector faces risks of disruption in energy, transportation, and raw materials.
Thai businesses are affected by the war in the Middle East through both direct and indirect channels. Although exports to this region account for only a limited share, some industries rely relatively heavily on this market, such as certain agricultural and food products and passenger vehicles. Other businesses, meanwhile, face pressure from rising energy costs, transportation disruptions, and accelerating raw material prices, which will have knock-on effects throughout related supply chains. At the same time, the tourism and healthcare sectors remain at risk of slowing due to travel disruptions and safety concerns.
However, essential agricultural and food products, as well as certain energy crops, may benefit from stockpiling demand and rising global prices.