Outlook quarter 3/2026

SCB EIC projects the Thai economy to expand by 2.2% in 2026 and 2.1% in 2027, driven primarily by the global AI investment cycle, which will support electronics exports and foreign direct investment in digital and technology-related sectors. However, despite stronger economic growth, the recovery is becoming increasingly K-shaped in multiple  dimensions. Strong investment and export growth rely import and generate relatively limited spillovers to the domestic economy. As a result, gains in income and employment are concentrated in industries and businesses linked to electronics exports and foreign investment, while many households and SMEs continue to face challenges from weaker income, high debt burdens, and limited access to credit.

Looking ahead, the Thai economy is expected to continue benefiting from the ongoing new investment cycle. However, its economic gain will depend on the ability to generate greater domestic value added, create jobs, and integrate local firms into emerging supply chains. Meanwhile, conflicts in the Middle East, U.S. trade protectionist measures, and the risks of Super El Niño remain key downside risks that could weigh on costs, incomes, and consumption, particularly among already vulnerable households and SMEs.

Thai Economy to Gain Continued Momentum from Investment and Exports in 2026, but Spillovers to the Broader Economy Remains Limited

Merchandise exports will remain a key driver of the Thai economy in 2026, particularly led by electronics exports benefiting from the global AI investment cycle. Private investment is also expect to grow steadily, supported by foreign direct investment particularly in the electronics and digital infrastructure. However, the gains to the broader economy remain limited. These sectors rely heavily on imported capital goods, raw materials, and intermediate goods, while linkages with local firms and workers remain relatively limited. As a result, strong export and investment growth, has yet to fully translate into domestic value added, employment, and income gains.

In the second half of the year, private consumption is expected to soften amid a slow recovery in labor income, high household debt, and tighter credit access. Government measures, particularly the first THB 200 billion from the 400 billion Emergency Decree, will help cushion economic activity and ease the cost-of-living pressures through the rest of this year. Meanwhile, spending on energy transition projects under the second THB 200 billion allocation is expected to disbursed and provided greater support to the economy in 2027.

K-Shaped Recovery Becoming More Pronounced Across Multiple Dimensions

SCB EIC assesses that Thailand’s economic recovery is becoming increasingly K-shaped across business type, firm size, the labor market and households. Growth is being concentrated among businesses tied to investment, technology, and global markets, while SMEs and domestic demand-dependent firms, most workers, particularly those in the informal sector, and low-income households continue to experience a slower recovery.

        • Business type and firm size: Growth is currently concentrated in AI-related electronics and digital technology supply chains, particularly among large firms with strong financial, technological, and human capital capabilities. In contrast, SMEs continue to face headwinds from a sluggish revenue recovery, squeezed profit margins, liquidity constraints, and limited access to credit. These challenges reflects intensifying foreign competition as well as a limited capacity to invest in and adapt to new technologies.

       • Labor and households: Income recovery has been stronger among high-skilled and formal workers than among informal workers. Meanwhile, low-income households continue to face pressures from sluggish income recovery, high debt burdens, and limited financial buffers, leaving them more vulnerable to economic shocks and more reliant on government support.

SCB EIC assesses Thailand’s increasingly K-shaped recovery as a potential constraint on the long-term growth. If stronger investment and exports cannot translate into broader gains in employment, income, and domestic purchasing power, economic growth could lose momentum and economic disparities may widen further. Moving from a K-shaped recovery to a more broad-based and sustainable expansion will require progress on three fronts. First, strengthening  Thailand’s new growth engines by leveraging foreign direct investment (FDI) to raise domestic value added through high-value activities, technology development, and workforce upskilling. Second, broadening the gains from growth by fostering stronger linkages between FDI, large corporations, and Thai SMEs, enabling more local firms to participate in new supply chains. Third, supporting groups that are lagging in the transition through targeted measures that  enhance competitiveness where potential groups remain and provide appropriate support for vulnerable groups to facilitate a smooth adjustment.

Thai Economy to Remain Below Potential in 2027, Highlighting the Need to Capture More Value from New Investment

SCB EIC projects the Thai economy to grow by 2.1% in 2027, broadly unchanged from 2026. Growth will continue  to supported by FDI, AI-related electronics industries, and digital infrastructure, alongside rising public investment in  energy transition projects.

However, the Thai economy is expected to continue growing below its potential, reflecting constraints from its traditional growth drivers. Private consumption is likely to remain subdued amid slow income recovery and ongoing household debt deleveraging, while SMEs continue to face structural vulnerabilities and policy support remains constrained by limited fiscal space. Meanwhile, the benefits from new foreign investment will take time to materialize. Stronger linkages with local firms, greater use of domestic inputs and services, and continued workforce upskilling will be essential to translating the new investment cycle into higher value added for the Thai economy.

Looking ahead, the Thai economy continues to face four downside risks. First, additional U.S. tariffs, particularly those  targeting excess capacity and transshipment. Second, a potential Super El Niño, which could reduce agricultural output, weighing on farm income and regional purchasing power, and add upward pressure to food prices. Third, geopolitical tensions and volatility in global energy prices. Fourth, vulnerabilities among household and SME, which could further dampen consumption and domestic demand.

Monetary Policy to Remain Accommodative, with the Policy Rate Likely to Stay at 1% Through End-2027

SCB EIC expects the MPC to keep the policy rate at 1% through end-2027, as the Thai economy continues to grow below potential and the recovery remains uneven. Headline inflation is still driven mainly by supply-side factors, particularly energy and fresh food prices, and is expected to ease gradually over the remainder of 2026. As a result, average inflation is projected to remain within the inflation target range.

Although Thailand’s policy rate is among the lowest in emerging markets, financial conditions remain relatively tight. This partly reflects the impact of higher global bond yields, which have also pushed up Thai government bond yields and borrowing costs for both the public and private sectors. Meanwhile, retail borrowers and SMEs continue to face tight credit conditions amid concerns over credit quality and still-weak debt servicing capacity.

Looking ahead, targeted financial measures, including debt restructuring programs and initiatives to improve SMEs’ access to credit, will play an important role in easing liquidity constraints. Combined with measures to enhance productivity and income-generating capacity. These efforts can help strengthen the competitiveness of Thai SMEs.

Thai Businesses Still Face Challenges, but Growth Opportunities Lie in AI, FDI, and Global Megatrends

Thai businesses are likely to face increasingly divergent growth prospects going forward. Firms linked to AI, foreign investment, and global megatrends are expected to outperform those that rely primarily on domestic demand. Key beneficiaries include the electronics industry, data centers, digital infrastructure, clean energy, health-related products and services, as well as business enablers that enhance productivity and competitiveness, such as digital solution, automation services, and green transition support. In contrast, SMEs and domestic-oriented businesses continue to face pressures from a sluggish demand, high financing costs, intensifying competition, and limited capacity to invest in  productivity- enhancing upgrades.

AI-Led Investment Remains a Key Driver of Global Growth Despite Geopolitical Risks and Tight Financial Conditions

SCB EIC projects global growth to continue expanding by 2.5% in 2026 and 2.6% in 2027. Since the beginning of this year, global growth has remained resilient despite higher energy prices stemming from the war in the Middle East, partly supported by continued investment and trade related to AI technology and fiscal stimulus measures worldwide. Yet, the gains from AI-related investment and trade remain concentrated in a handful of economies. The U.S. is benefiting from wider AI adoption through stronger productivity growth, although some displacement effects on employment are becoming visible. China is accelerating the use of AI in manufacturing to strengthen its exports competitiveness, but this could weigh on labor demand in the short run. Meanwhile, AI adoption across developing economies remains  at an early stage and continues to lag behind advanced economies.

Geopolitical risks remain elevated following the escalation of tensions in the Middle East. Disruption to energy prices higher than previously expected. In addition, the U.S. may impose further trade measures to raise its effective tariff rate closer to previously announced level, focusing on issues such as trade imbalances, excess capacity, and transshipment. These measures are likely to add further pressure on global trade.

Global financial conditions remain tight, reflected in the sharp rise in government bond yields across major economies. This is driven by strong funding demand from both the private sector, particularly for AI-related investment, and governments running large fiscal deficits, alongside investor concerns over inflation and fiscal stability. SCB EIC assesses that the key risk ahead is not necessarily a return to a global rate-hiking cycle, but rather a prolonged period of elevated bond yields. Against this backdrop, major central banks are likely to adopt a more cautious policy stance. While inflation pressures are expected to ease gradually, with some central banks may still need to tighten policy further to keep inflation expectations well anchored.

Full report is coming soon.