Thailand's Economy Faces Modest 1.5-2% Growth Despite Stimulus
Thailand's economy is expected to grow just 1.5-2% this year as Bangkok Bank cites international trade tensions and geopolitical uncertainty, with government stimulus proving insufficient to drive stronger expansion.
Bangkok Bank Senior Executive Vice President Kobsak Pootrakul stated the bank maintains its GDP growth forecast at 1.5-2% due to ongoing economic uncertainty from international factors including trade tensions and Middle Eastern conflicts. "Anything can happen this year. We don't want to keep adjusting our forecast because no one knows what the full year 2026 will bring. So we're sticking with the 1.5-2% range for now and will reassess in another 1-2 months," Kobsak said.
While acknowledging positive signals from oil prices stabilizing at pre-conflict levels, declining interest rates, a weaker baht, and continued export expansion, Kobsak warned that international trade negotiations and geopolitical factors could impact confidence and global economics at any time. Thailand's tourism sector continues struggling with incomplete recovery and reduced foreign visitor arrivals.
Regarding the "Thai Help Thai Plus" stimulus measure, Kobsak noted that government funds provide only limited support. At 40,000-50,000 million baht, the stimulus is merely a fraction of Thailand's 15-16 trillion baht economy. The government is focusing on unlocking private sector and foreign direct investment, particularly BOI-promoted projects, to inject capital into the economy since government resources are limited.
Kobsak praised the Monetary Policy Committee's decision to maintain the policy rate at 1%, calling it appropriate for reducing business and consumer financing costs. However, he emphasized that interest rate cuts should be implemented when the economy begins slowing, not after it stalls, comparing it to accelerating a car while it's decelerating rather than after it stops.
Bangkok Bank maintains its 2026 credit growth target at 3-5%, with large business and investment lending continuing domestically and internationally. However, the bank remains concerned about small and medium enterprises struggling with weak purchasing power and high household debt. Kobsak urged the government to implement measures including market expansion, increased public procurement, and consumer stimulus to help SMEs recover and encourage private sector investment and spending.
