Thailand Risks Second Lost Decade, Economists Warn
Thailand's economy risks a second lost decade as growth lags regional peers at 1.9 percent, tourism declines, and major automakers like Toyota threaten to shift production to Indonesia unless the country improves tax competitiveness.
Thailand faces the risk of entering a second consecutive lost decade, according to economic analysis. The first lost decade, from May 2014 to August 2023, was largely caused by coup leader General Prayut Chan-o-cha, who ruled for nine years and created a period of economic stagnation and uncertainty.
Current warning signs include: Thailand has registered the lowest economic growth among major ASEAN economies, with just 1.9 percent year-on-year growth in the second quarter of 2026 and no improvement expected in coming months. Tourist arrivals have declined nearly 3 percent this year while Vietnam and Japan see tourism growth. The automotive sector faces pressure as Indonesia actively recruits Japanese car manufacturers with incentive offers, while Toyota urges Thailand to create fair and competitive tax policies. Indonesia's Finance Minister Purbaya Yudhi Sadewa stated Jakarta is prepared to offer significant incentives to make the country a more competitive production base, questioning why Thailand remains the regional automotive hub despite Indonesia being Southeast Asia's largest and most populous economy.
Toyota executives met Thai Industry Ministry officials to discuss the automotive sector's future and tax structure overhaul. The company currently has no plans to relocate but is pushing for fair tax treatment compared to Chinese electric vehicles, which enjoy a 30 to 40 percent cost advantage over Thai-made vehicles. Thailand has long subsidized Chinese EV imports with taxpayer money dating back to the Prayut dictatorship, raising questions about what the country has gained from such policies.
