Thailand's GDP Growth Upgraded to 2.5% on AI Investment Cycle
Thailand upgraded its 2026 GDP growth forecast to 2.5% driven by AI infrastructure investment and tourism, though economists warn benefits are unevenly distributed with traditional sectors lagging behind.
KKP Research, part of the Kiatnakin Phatra Financial Group, has raised its Thai economic growth forecast for 2026 to 2.5% from 2.1%, and for 2027 to 2.7% from 2.2%, despite geopolitical headwinds. Two main drivers are supporting growth: strong tourism receipts and expanding private investment and exports linked to the global artificial intelligence capital expenditure cycle.
However, KKP Research warns that Thai economic recovery is showing an increasingly pronounced K-shaped pattern, in which some industries benefit from global investment and demand while grassroots economies and traditional sectors face structural challenges and limited recovery. The key factor behind the upgraded forecast is the recovery of the electronics supply chain, particularly in data storage and components related to AI infrastructure, which are seeing growing global demand.
This aligns with trends in large-scale data centre investment, making AI-related private investment and exports a major driver of Thai economic growth. By contrast, traditional industries face structural headwinds: the automotive sector is affected by the shift to electric vehicles, the petrochemical industry faces regional oversupply, and small and medium enterprises and appliance makers face pressure from imported goods.
Although the IMF ranks Thailand among the world's four largest exporters of AI-related goods, KKP Research emphasizes that Thailand must ensure these investments create and retain value within its economy. Three key issues need addressing: first, upgrading the value chain, as Thailand remains heavily reliant on assembly and imported raw materials, limiting export growth's ability to offset machinery and component imports; second, retaining foreign investment profits, since most Thai tech and data centre businesses are foreign-owned and send profits abroad, unlike South Korea and Taiwan where domestic companies circulate money through wages and taxes; and third, managing resource use, since AI infrastructure consumes vast amounts of electricity and water.
KKP Research proposes the government link Board of Investment incentives to value creation within Thailand and impose conditions on clean energy use and closed-loop water recycling. On monetary policy, KKP Research has lowered its 2026 inflation forecast to 1.8% and expects the Bank of Thailand's Monetary Policy Committee to hold rates through end-2027, as inflation pressure is cost-push in nature.
