The sudden escalation of the Middle East conflict since late February 2026 has unsettled global oil markets and disrupted major shipping routes. For Thailand, one of Asia’s most energy-dependent economies, this shock could transmit quickly and at a sensitive moment.

Thailand has just emerged from a long period of exceptionally low inflation. Headline inflation was -0.14% in 2025 and remained negative for 10 consecutive months into early 2026. The Bank of Thailand projects inflation will stay below its 1–3% target range until 2027 due to supply‑side pressures, structural shifts, and weak demand. In response, the Monetary Policy Committee cut the policy rate to 1%, a historically low level outside crisis periods, to support the economy and help bring inflation back to the target.

However, the global backdrop is shifting. If oil and freight prices continue to rise, Thailand risks a rebound in inflation for the unwanted reasons, higher import costs rather than stronger demand. This raises the risk of higher inflation alongside sluggish growth, a challenging environment for businesses and policymakers.

Why Thailand is so vulnerable to an energy shock?

Few countries in the region are as energy dependent as Thailand. The country imports around 90% of total crude oil and roughly 35-40% of total LNG usage. This dependence continues to rise.

Energy is deeply embedded in transportation, logistics, manufacturing, agriculture, and household consumption.  When global oil prices rise, the ripple effects spread quickly. Households could feel it first through higher fuel and electricity bills. Logistics and delivery operations could become more expensive as freight costs climb. Food prices could also edge up because both raw materials and transportation are becoming costlier. Manufacturers, particularly those reliant on petrochemicals and plastics, could face rising input prices that squeeze margins and disrupt production planning.

These pressures will first show up in the Producer Price Index (PPI) and then pass through to the Consumer Price Index (CPI) within one to three months. Though the speed of pass-through depends on government energy subsidies, competition from low‑cost imports, especially from China, and the purchasing power of consumers, which limits how much firms can raise prices. Energy alone makes up 12% of Thailand’s CPI basket, among the highest in ASEAN. Hence, Thailand possibly feels a global energy shock more intensely than neighboring countries such as Malaysia, Indonesia, or Singapore.

What could come next?

On 3 March, the temporary closure of the Strait of Hormuz, one of the world’s most critical oil chokepoints, pushed crude oil prices above USD 80 per barrel. This is a jump of around 14% from pre-conflict levels.

If the conflict expands or shipping disruptions prolong, these three things could happen.

1.   Oil could surge past USD 100 per barrel, raising fuel and electricity prices in Thailand.

2.   Freight and insurance costs could rise sharply, as vessels avoid high-risk areas and take longer routes.

3.   The Thai baht may weaken, as global investors move toward safe-haven currencies.

These risks could push Thailand’s inflation noticeably higher in the months ahead, especially in transport, electricity, processed food, and imported‑component goods. Since Thailand’s shock‑absorbing capacity is limited with only 61 days of crude reserves, far below Japan (254 days) or China (90+ days), the country cannot insulate retail prices for so long.

Who will feel the pain first?

Businesses will be hit early. Transport and logistics operators, where fuel accounts for 30–40% of operating costs, will face immediate pressure. Manufacturers relying on petrochemicals, plastics, and imported components will confront rising costs, while food processors face increases in both raw materials and shipping. SMEs are particularly vulnerable given limited liquidity buffers. Intense competition from low‑cost Chinese imports further reduces firms’ ability to pass on higher costs, tightening margins across sectors.

For households, petrol and diesel prices could rise within weeks, followed by electricity bills if future FT adjustments resume. Food prices, especially for processed items and transported goods, are likely to edge up as freight and input costs climb. Lower‑income households will be hardest hit, as energy and food account for a larger share of their consumption.

The Oil Fuel Fund will shape how quickly these costs pass through. The Fund allows the government to temporarily stabilize retail fuel prices, slowing the immediate impact of higher global oil prices. But this buffer isn’t endless. If oil gets close to USD 100 per barrel or stays expensive for a long time, the Fund will start feeling squeezed and will need to make gradual changes. Policymakers must therefore balance short‑term cushioning with maintaining price signals that promote more efficient energy use.

What it means for Thailand?

1. Business Leaders - Prepare for higher costs and tighter margins

Executives should prepare now. Hedging energy and FX exposure can offer stability, while building inventory for imported materials can reduce disruption risks. Selective, targeted price adjustments, not broad hikes, may be necessary to remain competitive. Improving energy efficiency, optimizing logistics routes, and accelerating the transition to EV fleets can help reduce long‑term vulnerability. Early renegotiation with suppliers and customers is essential as uncertainty increases. Pricing power will vary widely, so firms must understand which costs can be passed on and which must be absorbed.

2. Households - Expect higher living costs in the coming months

Thai families should brace for rising fuel, electricity, and food prices, especially if global oil trades above USD 90–100 per barrel. The Oil Fuel Fund can buy some time by delaying oil price pass-through, but sooner or later those costs will finally pass through. Households should monitor government announcements on diesel subsidies and FT pricing, as these decisions will directly affect expenses.

3. Policymakers - Strengthen energy security and relieve price pressures

Managing the Oil Fuel Fund will be critical. Subsidies and price caps can only delay, not solve due to Thailand’s dependence on imported fossil fuels. Policymakers should balance support with timely unwinding to protect vulnerable groups without weakening energy‑saving incentives.

Key policy priorities include diversifying supply routes, expanding reserves, supporting SMEs and transport operators, and clear communication to anchor expectations. Longer‑term solutions, such as rail logistics, energy efficiency upgrades, renewable energy use, and grid modernization, will be essential to reduce future vulnerability.

Looking Ahead

Thailand cannot avoid geopolitical shocks, but it can prevent them from turning into domestic strain. The coming weeks will reveal whether the Middle East conflict stays contained or triggers a major inflation spike. Energy costs are the key transmission channel. Ultimately, resilience comes from preparation, not just a prediction.

Recent severe flooding in Hat Yai is yet another wake-up call that Thailand remains unprepared to cope with climate change. This is not the first time the South has been devastated – similar floods struck Hat Yai in 2000 and 2010, and other regions have suffered from extreme weather. Yet, despite these warnings, preparedness remains inadequate. The latest deluge dumped 635 millimetres of rain in three days, submerging central Hat Yai, stranding thousands of residents and tourists, and once again we saw how extreme weather is becoming more frequent and damaging.

Climate change is disrupting the global water cycle, and Thailand is already feeling its impact. Changes in rainfall and water availability affect agriculture, industry, and daily life. For Thailand, most physical consequences of global warming are water-related—impacting food security, infrastructure, and economic stability.

First, climate change is intensifying rainfall extremes and increasing the risk of both floods and droughts. Data from the Thai Meteorological Department show that in June 2025, rainfall in the Central region was 37% below normal, while in November it surged to 358% above normal. In Hat Yai on 21 November 2025, rainfall reached 335 millimetres in a single day – an event that occurs only once every 300 years, according to data from the Thai Royal Irrigation Department. Such extremes disrupt water availability, causing cycles of flash floods and prolonged dry spells. Homes, roads, factories, and crops are damaged, undermining livelihoods. Global warming is pushing Thailand towards floods and droughts that are more severe, prolonged and frequent than anything the country has previously experienced.

Second, global warming is driving sea-level rise, threatening Thailand’s coastal areas. According to the World Meteorological Organization, global sea levels rose 4.7 millimetres per year between 2015 and 2024, an increase of 124% compared with 1993–2002. Meanwhile, the U.S. National Oceanic and Atmospheric Administration reports in 2023 that global sea levels have risen 21–24 centimetres since 1880. This rise is already affecting Thailand’s 3,151-kilometre coastline, causing coastal erosion, flooding during high tides and saltwater intrusion into farmland. Bangkok’s November 2025 flooding illustrates this risk: a combination of water runoff and seasonal high tides. According to the Royal Irrigation Department, heavy rain and increased releases from upstream dams pushed water levels in the Chao Phraya River higher, while tides rose to nearly two metres, overwhelming riverside districts.

Third, rising temperatures are increasing water demand. Hotter weather accelerates evaporation and raises water consumption for people, crops and livestock. This growing demand could spark conflicts between farms, factories and cities during droughts if water is not managed effectively. Industrial zones like the Eastern Economic Corridor already struggle with water shortages, forcing businesses to invest heavily in securing supplies or risk production cuts and reputational damage.

Thailand has not been idle. Over the past several decades, governments have built dams, irrigation networks, floodwalls and drainage tunnels, and improved early-warning systems in many river basins. But most of these investments were designed for yesterday’s climate. Today’s extremes are outpacing yesterday’s infrastructure and plans. Thailand must now start treating climate change explicitly as a water crisis and upgrade its water management accordingly.

That means sustained investment in reservoirs, urban retention basins and flood defences, including drainage systems that match today’s rainfall intensity rather than yesterday’s. Smart water management technologies – such as monitoring sensors, early-warning systems and efficient irrigation like Israel’s drip technology – should be scaled up. Climate-smart agriculture and crop diversification can reduce vulnerability in farming regions, while coastal protection measures based on global best practice can safeguard low-lying communities.

Infrastructure alone will not be enough. Thailand also needs stronger institutions: integrated river-basin planning, clear lines of responsibility between agencies, strict enforcement of land-use and zoning rules, and better coordination between national agencies, local governments and the private sector. Businesses should be required – and supported – to assess and disclose their water and climate risks, and to invest in resilience, from water recycling to more robust supply chains.

Global experience shows that technology and innovation can turn a water crisis into an opportunity. The Netherlands has shifted from simply “fighting” water to “living with” it through the Delta Works and the “Room for the River” programme, which redesigns riverbanks and floodplains so they can safely absorb excess water while protecting cities and farmland. Singapore uses sensors for real-time water monitoring, enabling efficient management across the system. Mexico’s dairy factories recycle water from milk processing, cutting dependence on external supplies. Israel’s advanced irrigation systems have transformed agriculture in arid regions. These examples make one thing clear: proactive investment and innovation are far cheaper than waiting for the next disaster.

Climate change is hitting Thailand through water – and the time to act is now. The Hat Yai floods are not an isolated event but part of a worsening pattern of extremes. By investing in infrastructure, technology, governance and regional cooperation, Thailand can still protect its economy and communities from the growing climate threat. The question is not whether we can afford to act, but whether we can afford not to.

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Published in the 'The Opinion' column on the Nation Thailand website on November 25, 2025.

As Donald Trump prepares for a second term, the global economy braces for a renewed wave of economic nationalism. Beneath the slogan of “Make America Great Again (MAGA)” lies a deeper macroeconomic shift, “fiscal dominance”, where government spending and political priorities override central bank independence.

In Trump’s MAGA world, fiscal dominance is not a theory. Instead, it’s a governing model where government spending and debt concerns take precedence over central bank independence and inflation control. His first term already featured unfunded tax cuts, rising government deficits, and pressure on the Fed. Trump 2.0 promises more of the same, with louder calls for ultra-low interest rates toward 1% to reduce debt servicing costs. Politicizing monetary policy undermines its institutional integrity and marks a dangerous shift away from long-standing norms.

The Dollar’s dilemma

A key question emerges. Will fiscal dominance lead to a stronger or weaker U.S. dollar? The answer is far from straightforward.

Traditionally, rising fiscal deficits could attract foreign capital, pushing up interest rates and strengthening the dollar. But under a populist “America First” agenda, this logic begins to unravel. If the Federal Reserve raises rates to combat inflation, it risks straining the government’s ability to service its massive debt load. With trillions in outstanding federal debt, even modest rate hikes can significantly increase interest payments, potentially crowding out other spending and shaking investor confidence. This dynamic raises concerns about U.S. fiscal sustainability and its long-term creditworthiness.

On the other hand, if the Fed yields to political pressure and keeps rates low, inflation could accelerate, eroding the dollar’s purchasing power. In either scenario, investor confidence in the dollar as a stable store of value may weaken, prompting a search for alternatives. While global uncertainty might temporarily boost the dollar as a safe haven, the long-term erosion of fiscal discipline and institutional credibility points to a gradual, secular decline in the dollar’s global standing.

A global contagion

U.S. fiscal dominance is not an isolated event, but it has the potential to become a global contagion. Given the scale of the U.S. economy and the dollar’s central role in global finance, shifts in U.S. fiscal and monetary policy inevitably ripple across borders. But the contagion is not just economic, it’s institutional. When the Fed is perceived as politically influenced, it weakens the global norm of central bank independence, encouraging similar pressures elsewhere.

This erosion of credibility can embolden governments, especially in emerging markets, to prioritize short-term political goals over monetary discipline. Countries with weaker institutional frameworks and high debt burdens are particularly vulnerable. The result is a “race to the bottom,” where central banks face growing pressure to accommodate fiscal needs, even at the expense of inflation control and long-term stability.

Emerging markets under parallel pressure

A growing number of emerging markets, including Argentina, Turkey, and El Salvador, are showing signs of fiscal dominance. Common drivers include high debt burdens, limited central bank autonomy, and political incentives to keep interest rates low. These countries have already faced consequences such as inflation volatility, currency depreciation, and capital flight.

Argentina, under President Milei, has made progress in restoring fiscal balance, but its legacy of populist spending and monetary financing left deep inflationary scars. Turkey is recovering from years of politically driven rate cuts that pushed inflation above 75%, with recent efforts to restore monetary credibility still underway. In El Salvador, expansive fiscal programs and unconventional policies, including Bitcoin adoption. This reflects the tension between political ambition and monetary discipline. These cases highlight how political interference in monetary policy can destabilize prices, weaken currencies, and erode investor confidence, especially in economies with weaker institutional safeguards.

While these trends are rooted in domestic governance and political cycles, spillovers from U.S. fiscal dominance, including dollar volatility and shifting capital flows, are amplifying the risks. Some EM governments are also adopting similar practices: prioritizing short-term political gains over long-term macroeconomic stability.

Navigating Thailand’s fiscal challenges

Thailand is not yet in a state of fiscal dominance, but the pressures are building. Public debt has risen significantly due to pandemic-era spending and persistent budget deficits. Popular initiatives such as the digital wallet scheme may add fiscal pressure if not carefully managed. Meanwhile, demographic shifts, particularly an aging population, will place permanent pressure on public finances.

Moreover, Thailand’s export-driven economy remains exposed to global volatility. A sharp slowdown in global demand could weaken exports and consequently reduce government revenue, while increasing the need for fiscal support to stabilize growth. In such circumstances, expectations for closer coordination between fiscal and monetary policy may rise. Although the Bank of Thailand operates with strong legal independence and a clear inflation-targeting mandate, navigating these pressures will require careful balancing to preserve long-term policy credibility.

As the U.S. pushes the boundaries of its institutional credibility, the world is watching. America’s fiscal-monetary experiment will send shockwaves beyond its borders. For Thailand, the path forward is clear to protect central bank independence, uphold fiscal discipline, and resist the lure of populist quick fixes. In a world tilting toward fiscal dominance, countries that maintain strong institutions and policy discipline will be better positioned for a smoother landing.

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Published in the 'The Opinion' column on the Nation Thailand website on September 2, 2025.

A month-long celebration, June’s Pride Month is a colorful period dedicated to advocating diversity and equality. The Pride community now numbers over 450 million people worldwide,  even larger than the population of the United States. According Deutsche Bank research,  Pride spending worldwide(often referred to as “Pink money”) is estimated to be over USD 3.7 trillion in 2023, with annual average growth of 2%. This is why the economic significance of Pride has gained increasing recognition in recent years.  

With global acceptance on the rise, this rainbow wave is creating significant economic opportunities. Global brands are increasingly engaging in Pride marketing campaigns, while governments in many countries actively promote rainbow tourism. A notable example includes Levi’s Pride collections, which have been launched annually for over ten years and have sold out in multiple countries. In addition, rainbow tourism - particularly during Pride festivals - has become an economic driver by generating tourism-related revenue and creating jobs. Pride Toronto, one of the world’s largest and longest-running Pride events, welcomed an estimated 3 million attendees during 23-25 June 2023. The festival supported the creation of more than 4,700 jobs and increased spending during the festival on food & beverages, recreation, entertainment, accommodation, transportation and shopping, ultimately contributing CAD 591.7 million to Ontario’s GDP.  This figure surpasses both 2022 (CAD 589.8 million) and 2019 (CAD 374.2 million) festival revenue according to the Pride Toronto Board of Directors.

Thailand is now gearing up to be a top global destination for the Pride movement. Following the passage of a marriage equality bill earlier this year, there has been a notable shift among Thai businesses and government agencies toward more active involvement in Pride marketing, including rainbow flag decorations, the launch of special Pride-themed products, and the organizing of Pride events/activities. However, concerns around rainbow-washing have emerged globally as many brands increasingly adopt rainbow symbols during Pride Month to boost sales without taking genuine action to support the Pride community. Avoiding Rainbow-washing is therefore a key challenge for Thailand as it strives to establish itself as an ideal Pride-friendly destination.

There are several effective ways to avoid rainbow-washing and tap into the Pride market, but doing so requires collaboration between businesses, government agencies, and the Pride community to create a truly Pride- friendly environment. The effort can begin with the business sector, which should demonstrate genuine support for the Pride community such as by donating to reputable LGBTQIA+ organizations and implementing inclusive workplace policies. Leading examples include Sansiri, Dtac, and Unilever, three model organizations participating in the “Live Equally…We Are Equal, I AM Equal To You” campaign supported by the UNDP. The campaign promotes inclusive recruitment of LGBTQIA+ employees, an equal work environment, and enhanced welfare benefits - such as marital leave, financial support for marriage, gender affirmation surgery leave, and leave to care for life partners. In addition, businesses should also clearly communicate their values beyond just branded merchandise. For instance, Pullman Bangkok King power and Mercure Bangkok Surawong proudly display rainbow flags year-round to signify their ongoing commitment to inclusivity and to warmly welcome LGBTQIA+ guests. Staff are trained to ensure that all guests feel comfortable, safe, and respected. Most importantly, businesses, government agencies, and the Pride community should actively collaborate to organize Pride events throughout the year, not just during Pride month, and promote Thailand as a Pride-friendly destination to boost rainbow tourism. A great international example is VisitOSLO’s “The Proud Experience” campaign which positions Oslo as a city welcoming Pride travelers. The campaign features authentic stories from key LGBTQIA+ influencers worldwide as well as a Pride travel guide covering hotels, restaurants, and activities on the official VisitOSLO website. This holistic approach has helped Oslo attract more visitors and establish itself as one of the world’s top Pride-friendly destinations.   

Pride consumers today have higher expectations for meaningful contributions to their community. This shift creates both opportunities and challenges for Thailand in its efforts to become a top global Pride destination.


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Published in the 'The Opinion' column on the Nation Thailand website on June 1, 2025.

On February 17, 2025, the Business at OECD (BIAC) General Assembly Meeting took place in Paris, gathering national business leaders and employers’ federations from member countries. The meeting focused on the critical issues facing the global business community in 2025. Representing Thailand's private sector, the Committee on OECD Joint Standing Committee on Commerce, Industry, and Banking (JSCCIB) attended this pivotal event. This follows the JSCCIB's recent membership as an observer in BIAC, which began in October 2024.

As we enter 2025, business leaders are confronted with an increasingly fragmented and unpredictable global scenario. Geopolitical tensions are rising, and unilateral actions risk breaking international ties. Amid these disruptions, one principle remains clear: “Business thrives on a predictable, rules-based international order.” For decades, the OECD has provided unique value to market-based democracies, promoting evidence-based policy guidelines to foster private sector-led growth, employment, and open markets. However, with globalization under threat, the path forward on key issues — including tax, tariffs, trade, and sustainable transition — remains uncertain.

This year, the Assembly underscored the importance of economic cooperation and the OECD's role in reinforcing “economic competitiveness.” It emphasized the need for collaboration with businesses to reduce uncertainty, volatility, and constraints. This article highlights three priority themes of recommendations that emerged from the Assembly.

1. Raising Business Competitiveness: The meeting stressed the need to enhance business competitiveness in OECD countries through structural reforms to reduce barriers, bureaucracy, and regulatory burdens. The OECD's role in providing evidence-based analysis and policy recommendations is crucial for driving these reforms. The recent Business at OECD Economic Policy Survey highlights significant business constraints, including labor market tightness due to vacancies and skill mismatches, trade and investment barriers, energy price volatility from geopolitical risks, excessive regulatory red tape, and a lack of incentives for research and development.

2. Shaping Future Industries: Innovation and technological advancement are essential to addressing global challenges. The Assembly called for government policies that create favorable conditions for business potential. The OECD's role should emphasize the risks of overreliance on government-driven strategies. A market-based foundation is crucial for gaining a competitive edge in emerging industries, rather than engaging in an industrial policy race. The OECD's role in setting standards and providing guidance on emerging technologies was also emphasized, along with the need for international cooperation to address cybersecurity threats and promote trusted data flows.

3. Fostering Open, Fair, and Competitive Markets: The Assembly reiterated the importance of open and fair markets for the global economy. Participants expressed concerns about the rise of protectionist policies and economic nationalism, noting that de-globalization poses serious risks to progress made through multilateralism. The OECD has been urged to advocate for the benefits of international trade and investment and work towards eliminating tariff and non-tariff barriers. As a community committed to open, fair, and competitive markets, the Assembly also discussed the importance of sustainable supply chains and the OECD's role in promoting environmental sustainability through trade policies.

The BIAC General Assembly 2025 provided valuable insights for fostering economic cooperation and sustainable growth. The Thai government has embarked on its journey towards OECD membership by self-assessing and preparing the “Initial Memorandum: Preliminary Self-Assessment against OECD Legal Instruments” on 26 addressed issues for submission to the OECD, tentatively by the end of 2025. This document will outline the alignment of Thailand’s legislation, policies, and practices with OECD legal instruments, including those already adhered to. This process will later initiate technical discussions to strengthen the country's position for implementing significant reforms based on OECD recommendations.

The coming reform process, involving public, private, and citizen cooperation, represents a hopeful step forward for Thailand. The active participation of Thailand's private sector as an observer member of BIAC is crucial in this roadmap, advocating for relevant issues such as regulatory simplification, digital transformation, sustainable finance, and sound corporate governance. By aligning with OECD standards, Thailand can hopefully enhance its competitiveness, build a stronger, more resilient nation, and eventually contribute to a more stable global economy.


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Published in the 'The Opinion' column on the Nation Thailand website on March 6, 2025.

Author: Kriskorn Trachoo

One of the current issues facing Thailand lies on the agricultural sector in which majority of Thai workforces are allocated. Thai farmers have limited access to funding, usually in the form of borrowing with the two popular sources being the Bank for Agriculture & Agricultural Cooperatives and the informal capitalist, both has financial cost. With the recent downward price trend of agricultural products (decreased by an average of 2.5% per year from 2012 to 2017 on price index), farmers are exposed to higher debt burden (agricultural household debt increased by 17% YOY in 2017) as well as facing constraint to improve productivity and invest for opportunities. Using innovation to help expand funding channel for farmers may be necessary and may be one of the potential remedies. By looking at our neighbors in ASEAN, we can see many useful case studies.

iGrow, an Indonesian Start up, is one example where technology of crowdfunding is applied to the agricultural sector. iGrow developed a platform to connect between investors who do not have knowledge or skills in farming with farmers who have skills but lack the funds. The general public who wishes to gain return on their investment can now choose to invest in preferred choice of plantation listed by the company along with an estimate of annual yield and contract period for each. The availability ranges from durian, sugarcane, to livestock farming. After funding period to the public is completed, iGrow will manage and supervise the production in collaboration with participating farmers, as well as coordinate with trading partners and distribute returns to all parties. iGrow is also responsible for engaging land owners to acquire untapped lands to be used in the project, addressing one of the funding issues for farmers. This business model not only expand opportunities and generate income for farmers, investors and the general public can also earn returns. After its foundation in 2014, iGrow has assisted in creating career for 2,000 farmers, bringing about 1,000 hectares of land for agricultural use, and produce 500 tons of agricultural products.

To ensure stable returns for all stakeholders, Cropital; a similar start up from Philippines, has a pre-screening procedure for farmers involved in the project while also referring scholars and specialists for consultation to ensure productivity. They also diversify various crops for each farmer to be responsible, mitigating exposure to market risk. Farm On, another similar start up, constructed a reservoir to prepare for drought as well as drainage way to cope with heavy rainfall.

When looking back at Thailand, the current technology used mostly in agricultural sector is in the form of commodity trading platform and management system. Happy Farmers, a recently founded start up, has developed a marketplace platform connecting farmers selling organic merchandise directly to consumers, reducing the role of middlemen and unfair pricing. Ricult, another start up, developed data analytic system for crop management. However, the concept of crowdfunding on agricultural commodities in Thailand still seems to be limited. By looking forward in the future, reducing farmers to debt exposure may be the key to sustainability for agricultural sector and Thai economy as a whole.