Bank of Thailand Reassesses Growth Potential as AI Boosts Exports
The Bank of Thailand is reviewing its long-standing 2.7% potential growth estimate as AI-driven exports reshape the economic structure. While technology exports and investment are providing a new growth engine, the gains remain concentrated and have not broadly lifted domestic demand or inflation, which is expected to stay high for two more quarters before falling sharply in 2027.
Bank of Thailand Assistant Governor for Financial Markets Policy, Don Nakornthab, revealed at the Monetary Policy Forum that the central bank is closely monitoring both inflation trends and structural economic changes. The Thai economy is beginning to gain momentum from the technology and artificial intelligence (AI) cycle, particularly electronic exports, computer components, and technology sector investment.
However, the AI impulse has not yet translated into clear upward price pressure because technology-driven economic activity remains concentrated in specific segments. Related businesses rely heavily on imports and employ relatively little labor, limiting the pass-through to household income and domestic consumption.
"This dynamic makes the inflation picture different from the technology sector's recovery. At the Monetary Policy Committee meeting on October 28, even without October inflation data, the assessment was that inflation would edge up due to temporary supply-side factors and remain elevated for about two more quarters before declining," Don said.
After that, headline inflation has a chance to fall to low levels or turn negative in some periods of 2027, due to the high energy price base from the previous year and the trend of declining energy prices. Meanwhile, core inflation remains stable, reflecting that domestic demand-side price pressure has not accelerated in line with the technology sector impulse.
Separately, the Bank of Thailand is reviewing Thailand's potential growth figure, currently at around 2.7%, which has served as the assessment framework for many years. As the economic structure and the Manufacturing Production Index (MPI) have changed, it is necessary to reassess the current level of Thailand's growth potential.
This matters for forward-looking economic assessment because the Bank of Thailand projects Thai GDP expansion of 2.4% in 2026 and 2.1% in 2027. If the new potential growth figure shifts from the previous one, the interpretation that the Thai economy is "growing below potential" may also need adjustment according to the changed economic structure.
While consumption and SME credit remain constrained by high household debt and financial institutions' caution, the impulse from AI and exports cannot yet fully diffuse to the broader economy.
The overall picture poses a new challenge for Thai monetary policy: the economy has a new engine from AI, but inflation is not accelerating accordingly, and the country's growth potential may have shifted from before.
Nevertheless, the potential growth review may be a key to assessing whether the Thai economy ahead is "weak" or merely growing in line with a new, changed potential.
