Thailand Cuts 2026 Econ Growth Forecast to 1.6%, Inflation May Reach Upper End of Target Range
Complete. Here is the key summaryThe Thai government has revised its 2026 economic growth forecast down to 1.6% from 2%, citing the impact of the Middle East conflict on growth and inflation. The crude oil price forecast has been raised significantly, contributing to an expected average inflation rate of 3%, at the upper end of the central bank's target. The Thai baht has declined by 0.7% against the USD, with a cumulative drop of over 4% since the Iran war began. Additionally, foreign tourist arrivals are projected to be lower than previously expected due to decreased visitors from the Middle East and Europe.
According to Bloomberg, the Thai government expects the Middle East conflict to weigh on economic growth and push up inflation, stressing the need to strengthen fiscal support to protect consumers and businesses. The Ministry of Finance lowered its 2026 economic growth forecast from 2% to 1.6%, as its crude oil price forecast was sharply raised from USD57.5 per barrel to USD91 per barrel.
Officials said average headline inflation this year is projected to reach 3%, at the upper end of the central banks 1% to 3% target range. Following the downgrade in growth forecasts, the Thai baht extended its decline to 0.7% against the USD. As Thailand is highly dependent on oil imports, the baht has fallen by more than 4% cumulatively since the outbreak of the Iran war, making it the second-worst performer among emerging market currencies.
On trade, the Ministry of Finance raised its forecast for goods export growth this year from 1% to 6.2%, while imports are expected to increase by 13.9%. As a result, the current account surplus is projected to narrow sharply to USD6 billion, from the previously estimated USD12 billion and last years USD15.9 billion, potentially exerting pressure on the exchange rate.
In tourism, affected by a decline in visitors from the Middle East and Europe, as well as intensifying competition from countries such as Vietnam and S Korea, foreign tourist arrivals are expected to reach 33.5 million, lower than the earlier forecast of 35.5 million. (ss/j)
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