ECONOMIC OUTLOOK / SCB EIC MONTHLY INSIGHT
23 June 2026
Outlook quarter 2/2026
SCB EIC raises Thailand’s GDP growth forecast 2026 to 2% as Middle East tensions ease.
SCB EIC has raised its Thailand’s GDP growth forecast to 2.0% for 2026, as easing Middle East tensions bring down energy prices, helping to reduce travel costs and support the tourism recovery. Exports and investment in selected industries have also held up well. However, the Thai economy is expected to lose momentum in the period ahead, as earlier increases in energy and raw material costs during the war escalation continue to feed through to production costs, inflation, and household purchasing power. Despite additional support from the government, particularly the THB 400 billion Emergency Decree, the recovery remains K-shaped and uneven, with gains concentrated in a few sectors, notably the import-intensive electronics industries. Low- to middle-income households and SMEs remain fragile amid slowing income growth and persistently high debt burdens. Looking ahead to 2027, growth is projected to remain broadly unchanged at 1.9%, reflecting limited new growth drivers alongside tight financial conditions and elevated external risks.
Thailand’s economy gains short-term support from easing Middle East tensions, but lingering cost pressures will continue to weigh on economic activity.
Declining oil prices, albeit still above pre-war levels, have helped ease the impact on businesses, particularly tourism, which should recover more strongly as travel costs fall. Meanwhile, exports, especially electronics, continue to expand, alongside robust foreign investment growth. However, the impact of higher energy and production costs in the prior period continues to feed through to the real economy and will exert more visible pressure on economic activity from Q2 onwards.
SCB EIC assesses that these impacts will be transmitted to the Thai economy through three key channels:
(1) elevated energy and production costs will continue to pressure inflation, the cost of living, household purchasing power, and business profit margins, particularly for energy- and logistics-intensive sectors; (2) a slowing global economy, which will weigh on exports through weaker global demand, especially in markets directly affected by the conflict. At the same time, previously high energy import prices and rising capital goods imports are likely to put further pressure on the trade balance and current account balance this year; and (3) tighter financial conditions, driven by market volatility and capital flow dynamics, are raising risk premiums and bond yields.
The K-shaped recovery is becoming more pronounced, with growth increasingly concentrated in large firms and technology-related sectors, while households and SMEs remain fragile.
SCB EIC assesses that Thailand’s economic recovery is likely to become increasingly K-shaped, with key growth drivers concentrated among large businesses and technology-related industries, such as AI, data centres, electronics, and digital infrastructure, which are supported by investment and exports in certain product categories. However, most businesses in these sectors tend to have high import content, which limits the broader positive spillovers to domestic supply chains, employment, and income.
In contrast, low- to middle-income households and SMEs remain vulnerable, reflecting slow income recovery, rising production costs and living expenses, and high debt burdens. As a result, consumption recovery remains constrained, while businesses reliant on domestic purchasing power, particularly small businesses and certain service sectors, continue to face pressures on sales, liquidity, and debt-servicing capacity. The divergence in recovery across business and household segments will remain a key constraint on the Thai economic outlook going forward.
Thailand’s economy is expected to grow at a subdued pace in 2026–2027, despite fiscal support from the government through the THB 400 billion Emergency Decree.
SCB EIC projects that Thailand’s economy will expand by 2.0% in 2026, higher than previously expected but still below its historical average. The upward revision reflects stronger-than-expected Q1 economic data, easing Middle East tensions, and additional fiscal support, particularly through the THB 400 billion extra borrowing. The fiscal package is expected to help sustain economic activity through cost-of-living relief measures, consumption stimulus, and selected investment programs related to the energy transition. Nevertheless, support from the ‘Thai Help Thai Plus’ programme is likely to be temporary, with its impact expected to gradually fade toward the end of the year. Meanwhile, greater clarity on energy transition measures will be key to assessing their long-term impact on the economy.
For 2027, SCB EIC expects Thailand’s economy to expand at a pace similar to 2026, at 1.9%, reflecting limited new growth drivers to lift medium-term growth. Meanwhile, traditional growth engines remain constrained, consumption will recover only gradually amid household deleveraging, while investment and exports remain concentrated and highly import-dependent. Fiscal policy space is narrowing, and SMEs continue to face structural vulnerabilities from intense competition and tight financial conditions.
Monetary policy remains constrained, with the MPC likely to keep the policy rate unchanged at 1.0% throughout the year.
SCB EIC assesses that the MPC is likely to keep the policy rate unchanged at 1.0% throughout 2026. Upward inflationary pressures are expected to stem primarily from supply-side factors, while long-term inflation expectations among households and businesses remain well anchored. SCB EIC has revised down its average inflation forecast for this year to 2.6%, which remains within the target range, as easing geopolitical tensions have led to lower energy prices. At the same time, Thailand’s external stability remains robust, supported by ample international reserves, reducing the need to raise interest rates aggressively to contain inflation or currency depreciation, unlike in some other countries in the region.
Nevertheless, despite the low policy rate, overall financial conditions remain tight, particularly for retail borrowers and SMEs, amid slowing income growth and continued caution among financial institutions in extending credit, reflecting concerns deteriorating asset quality and repayment capacity. As such, debt relief measures and efforts to improve SMEs’ access to credit, alongside policies to strengthen income generation, will play a critical role in supporting liquidity and sustaining economic activity in the period ahead.
Businesses face growing pressures, while opportunities are increasingly concentrated in AI-driven, FDI-linked, and mega-trend sectors.
Thai businesses continue to face significant pressures with input costs still above pre-war levels, alongside supply chain volatility, and an uneven recovery in demand. As a result, many businesses are experiencing pressure on sales, margins, and liquidity, particularly those with limited ability to pass through higher costs amid still-fragile demand conditions.
SCB EIC views business prospects becoming increasingly divergent in the period ahead, particularly between large corporates and SMEs. Firms that can adapt by lowering costs, improving productivity, and integrating into supply chains aligned with global trends are likely to sustain growth. However, these firms will still need to closely monitor risks from elevated cost pressures and demand volatility.
Growth opportunities remain concentrated in sectors linked to AI, Foreign Direct Investment (FDI), and mega trends, including electronics, data centres, clean energy, food, and healthcare. These sectors continue to benefit from new investment, technological transformation, production relocation, and long-term shifts in consumer behaviour. Against this backdrop, Thai businesses should accelerate efforts to enhance efficiency, optimise cost structures, and integrate into emerging supply chains to strengthen competitiveness amid persistently high global uncertainty.
Global growth is expected to moderate this year amid higher inflation and elevated interest rates.
SCB EIC expects the global economy to expand by 2.5% and 2.6% in 2026 and 2027, respectively, with key momentum continuing to come from AI investment, thereby providing sustained benefits to electronics-producing economies. The situation in the Middle East has improved, but uncertainty remains elevated. Looking ahead, U.S. import tariffs under Section 301 warrant close monitoring, as they pose a key risk to global trade in the second half of the year. On monetary policy, major central banks continue to prioritise upside inflation risks. SCB EIC expects the Fed to keep monetary policy unchanged this year, maintaining the policy rate at 3.5–3.75% throughout the year. Global financial conditions are also expected to remain tight, consistent with elevated government bond yields.
Full report is coming soon.
Thailand’s economy gains short-term support from easing Middle East tensions, but lingering cost pressures will continue to weigh on economic activity.
Declining oil prices, albeit still above pre-war levels, have helped ease the impact on businesses, particularly tourism, which should recover more strongly as travel costs fall. Meanwhile, exports, especially electronics, continue to expand, alongside robust foreign investment growth. However, the impact of higher energy and production costs in the prior period continues to feed through to the real economy and will exert more visible pressure on economic activity from Q2 onwards.
SCB EIC assesses that these impacts will be transmitted to the Thai economy through three key channels:
(1) elevated energy and production costs will continue to pressure inflation, the cost of living, household purchasing power, and business profit margins, particularly for energy- and logistics-intensive sectors; (2) a slowing global economy, which will weigh on exports through weaker global demand, especially in markets directly affected by the conflict. At the same time, previously high energy import prices and rising capital goods imports are likely to put further pressure on the trade balance and current account balance this year; and (3) tighter financial conditions, driven by market volatility and capital flow dynamics, are raising risk premiums and bond yields.
The K-shaped recovery is becoming more pronounced, with growth increasingly concentrated in large firms and technology-related sectors, while households and SMEs remain fragile.
SCB EIC assesses that Thailand’s economic recovery is likely to become increasingly K-shaped, with key growth drivers concentrated among large businesses and technology-related industries, such as AI, data centres, electronics, and digital infrastructure, which are supported by investment and exports in certain product categories. However, most businesses in these sectors tend to have high import content, which limits the broader positive spillovers to domestic supply chains, employment, and income.
In contrast, low- to middle-income households and SMEs remain vulnerable, reflecting slow income recovery, rising production costs and living expenses, and high debt burdens. As a result, consumption recovery remains constrained, while businesses reliant on domestic purchasing power, particularly small businesses and certain service sectors, continue to face pressures on sales, liquidity, and debt-servicing capacity. The divergence in recovery across business and household segments will remain a key constraint on the Thai economic outlook going forward.
Thailand’s economy is expected to grow at a subdued pace in 2026–2027, despite fiscal support from the government through the THB 400 billion Emergency Decree.
SCB EIC projects that Thailand’s economy will expand by 2.0% in 2026, higher than previously expected but still below its historical average. The upward revision reflects stronger-than-expected Q1 economic data, easing Middle East tensions, and additional fiscal support, particularly through the THB 400 billion extra borrowing. The fiscal package is expected to help sustain economic activity through cost-of-living relief measures, consumption stimulus, and selected investment programs related to the energy transition. Nevertheless, support from the ‘Thai Help Thai Plus’ programme is likely to be temporary, with its impact expected to gradually fade toward the end of the year. Meanwhile, greater clarity on energy transition measures will be key to assessing their long-term impact on the economy.
For 2027, SCB EIC expects Thailand’s economy to expand at a pace similar to 2026, at 1.9%, reflecting limited new growth drivers to lift medium-term growth. Meanwhile, traditional growth engines remain constrained, consumption will recover only gradually amid household deleveraging, while investment and exports remain concentrated and highly import-dependent. Fiscal policy space is narrowing, and SMEs continue to face structural vulnerabilities from intense competition and tight financial conditions.
Monetary policy remains constrained, with the MPC likely to keep the policy rate unchanged at 1.0% throughout the year.
SCB EIC assesses that the MPC is likely to keep the policy rate unchanged at 1.0% throughout 2026. Upward inflationary pressures are expected to stem primarily from supply-side factors, while long-term inflation expectations among households and businesses remain well anchored. SCB EIC has revised down its average inflation forecast for this year to 2.6%, which remains within the target range, as easing geopolitical tensions have led to lower energy prices. At the same time, Thailand’s external stability remains robust, supported by ample international reserves, reducing the need to raise interest rates aggressively to contain inflation or currency depreciation, unlike in some other countries in the region.
Nevertheless, despite the low policy rate, overall financial conditions remain tight, particularly for retail borrowers and SMEs, amid slowing income growth and continued caution among financial institutions in extending credit, reflecting concerns deteriorating asset quality and repayment capacity. As such, debt relief measures and efforts to improve SMEs’ access to credit, alongside policies to strengthen income generation, will play a critical role in supporting liquidity and sustaining economic activity in the period ahead.
Businesses face growing pressures, while opportunities are increasingly concentrated in AI-driven, FDI-linked, and mega-trend sectors.
Thai businesses continue to face significant pressures with input costs still above pre-war levels, alongside supply chain volatility, and an uneven recovery in demand. As a result, many businesses are experiencing pressure on sales, margins, and liquidity, particularly those with limited ability to pass through higher costs amid still-fragile demand conditions.
SCB EIC views business prospects becoming increasingly divergent in the period ahead, particularly between large corporates and SMEs. Firms that can adapt by lowering costs, improving productivity, and integrating into supply chains aligned with global trends are likely to sustain growth. However, these firms will still need to closely monitor risks from elevated cost pressures and demand volatility.
Growth opportunities remain concentrated in sectors linked to AI, Foreign Direct Investment (FDI), and mega trends, including electronics, data centres, clean energy, food, and healthcare. These sectors continue to benefit from new investment, technological transformation, production relocation, and long-term shifts in consumer behaviour. Against this backdrop, Thai businesses should accelerate efforts to enhance efficiency, optimise cost structures, and integrate into emerging supply chains to strengthen competitiveness amid persistently high global uncertainty.
Global growth is expected to moderate this year amid higher inflation and elevated interest rates.
SCB EIC expects the global economy to expand by 2.5% and 2.6% in 2026 and 2027, respectively, with key momentum continuing to come from AI investment, thereby providing sustained benefits to electronics-producing economies. The situation in the Middle East has improved, but uncertainty remains elevated. Looking ahead, U.S. import tariffs under Section 301 warrant close monitoring, as they pose a key risk to global trade in the second half of the year. On monetary policy, major central banks continue to prioritise upside inflation risks. SCB EIC expects the Fed to keep monetary policy unchanged this year, maintaining the policy rate at 3.5–3.75% throughout the year. Global financial conditions are also expected to remain tight, consistent with elevated government bond yields.
Full report is coming soon.