Thailand's Economy at a Crossroads: Private Sector Warns of Tough 2026 Despite New Opportunities

 

The FTI identifies structural weaknesses, geopolitical risks, and high debt as major threats; calls for a bold '4GO' strategy to drive digital and green industrial reform.

 

Thailand is entering 2026 facing an increasingly complex economic landscape, with leading private sector figures warning that the year ahead will be challenging, even as new opportunities emerge.

 

Kriengkrai Thiennukul, president of the Federation of Thai Industries (FTI), described the economy as "stuck in the mud." 

 

He noted that quarter-on-quarter GDP growth had slowed significantly from 3.2% in Q1 to a mere 0.3% in Q4 of 2025, demanding a substantial stimulus package to regain momentum.

 

The urgency for reform is underscored by data from the IMF, which warns that without serious structural change, Thailand risks falling from second to fifth place among ASEAN economies by 2030—a clear signal that the country "must change the game" to preserve its competitiveness.

 

The FTI highlighted persistent structural issues and external shocks pressuring the economy. 

 

Internal weaknesses include the rapid acceleration of the aging society (21.6% of the population), high corruption and an outdated bureaucracy, and the persistent middle-income trap with low GDP per capita. 

 

Compounding these are a distorted budget structure, with high fixed expenditure and low investment, and fragile political stability.

 

 

External threats include the impact of US tax measures and trade wars, global geopolitical risks, particularly the border conflict with Cambodia, high burdens of household and business debt, and rising costs for exporters due to severe environmental regulations like CBAM and EUDR.

 

 

 

A Mixed Outlook for 2026

While the FTI sees persistent downside risks, including a slowdown in export growth (expected to be high, but driven largely by low-value-add goods and gold) and high unemployment (2.1%, a two-year high), clear opportunities are also taking shape:

 

Investment Growth is strong in future industries like EVs, digital technology, and processed food.

 

The upcoming 2026 election is viewed as a chance to restore political stability and investor confidence.

 

Government's "Quick Big Win" policies are expected to support the economy through boosting tourism and providing liquidity to SMEs, helping push GDP toward the 2.5% level.

 

The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) estimates 2025 GDP growth will settle between 1.8–2.2%.
 

 

 

The "4GO" Industrial Revolution

To move Thailand from traditional manufacturing to Next-Gen Industries, the FTI proposes its "4GO" core strategy:

 

GO Digital & AI: Driving the adoption of technology and AI across all industrial sectors.

GO Innovation: Fostering a new generation of innovative and highly competitive entrepreneurs.

GO Global: Preparing Thai products for aggressive global expansion, supported by accelerated FTA deals.

GO Green: Committing to serious carbon reduction, moving Thailand's Net Zero target forward by 15 years to 2050.

 

The FTI urged the government to implement this strategy, alongside key reforms like widespread regulatory reform to cut outdated laws and corruption, and a massive leapfrog in workforce skills development.

 

Experts agree that 2026 is a "crossroads" year. Thailand must transition from simply catching up to actively leading change to build a robust, sustainable industrial base for the next decade.