KKP Projects 2026 GDP at 2.5%, Urges AI Supply Chain

KKP Research, part of the Kiatnakin Phatra Financial Group, has raised its 2026 GDP growth forecast for Thailand to 2.5%, up from the previous 2.1%, while noting that this remains the lowest in ASEAN, on par with the Philippines. The report projects ASEAN-wide growth of 5.0% in 2026, led by Vietnam at 8.2%, Malaysia at 5.2%, and Singapore at 5.1%, with Thailand and the Philippines both at 2.5%. Thailand does benefit from the AI investment cycle, with stronger exports and private investment, and the IMF ranks it among the world’s top four exporters of AI-related goods. However, the economic value captured domestically remains limited compared to neighbours. Structural constraints keep Thailand in low-value parts of the supply chain, reliant on imported components, while most technology and data‑center investments are foreign‑owned, causing profits to flow abroad. AI‑linked investment is concentrated in data centers that use few domestic inputs, limiting spillovers to local businesses, and growth in AI is further hampered by declining traditional manufacturing due to import competition. Despite robust export growth, Thailand runs a current‑account deficit, unlike some ASEAN peers that enjoy trade surpluses from the AI boom. The analysis warns that data‑center investments may deliver lower economic returns than announced because of high reliance on imported equipment, foreign ownership of returns, and modest job creation relative to capital spent. To increase domestic benefits, KKP recommends clearer investment conditions, such as setting electricity prices to reflect true costs, regulating water use, linking BOI incentives to domestic value‑addition, skills development, and tying benefits to the traditional electronics sector. Export growth is expected to remain strong through the fourth quarter of 2026, but the limited ability to retain value will continue to constrain the overall economic impact.