Thailand's Economy Faces Worst Growth in 30 Years Amid Structural Weaknesses and Global Uncertainty

 

Private sector warns of sub-2% expansion as strong baht, export decline and political transition compound longstanding economic vulnerabilities.

 

Thailand's economy is projected to record its lowest growth rate in three decades this year, expanding below 2% for the first time outside crisis periods, according to the Joint Standing Committee on Commerce, Industry, and Banking (JSCCIB).

 

Speaking at the monthly meeting on Wednesday, Dr Poj Aramwattananont, chairman of the Thai Chamber of Commerce and Board of Trade, warned that Thailand faces the slowest growth in the region, hampered by both longstanding structural fragilities and mounting external pressures.

 

The JSCCIB forecasts GDP growth of 1.6% to 2.0% for 2026, with exports projected to contract between 0.5% and 1.5% – a stark reversal from the estimated 10% export growth in 2025.

 

 

Multiple Headwinds Converge

The private sector coalition identified a confluence of challenges weighing on the Thai economy.

 

Domestically, the country grapples with a substantial informal economy, elevated household debt, limited fiscal capacity, and regulatory complexity that hampers data connectivity across government agencies.

 

These structural issues are compounded by the lingering effects of last year's natural disasters, rising cybercrime, grey capital flows, and potential delays in the budgetary process.

 

Of particular concern is the Thai baht's 8.2% appreciation over the past year – the second-strongest performance in the region.

 

Payong Srivanich, chairman of the Thai Bankers' Association, described this as an effective additional tax on exporters that erodes competitiveness.

 

 

"The baht's strength is being driven by factors outside the traditional trade economy, specifically its links to gold trading and digital assets," Payong explained.

 

He called for enhanced regulatory surveillance to track these capital movements and prevent them from undermining the real economy.

 

Kriengkrai Thiennukul, chairman of the Federation of Thai Industries, highlighted the competitive disadvantage this creates.

 

While the baht strengthened, Vietnam's dong weakened by approximately 3%, generating an 11-13% price gap for comparable goods.

 

"Thailand relies heavily on exports, which account for 60% of GDP," Kriengkrai noted. "Agricultural exports like rice are particularly affected, with Thai prices significantly higher than those in Vietnam and India."

 

 

 

 

Global Uncertainties Mount

The JSCCIB expressed growing concern over global economic uncertainty stemming from geopolitical factors.

 

Recent US intervention in Venezuela signals an increasingly polarised "New World Order" that affects the global economic system, expected to expand more slowly than last year.

 

Dr Poj noted that whilst direct trade between Thailand and Venezuela remains modest at approximately $500 million, the broader implications for supply chains and energy markets – given the $60 billion in regional investments – require close monitoring.

 

The impact of US tariff measures is also becoming more apparent, with Thai exports excluding electronics already showing contraction, reflecting heightened uncertainty for the Thai economy.

 

 

 

Post-Election Priorities

Looking ahead to the upcoming election, the JSCCIB emphasised the need for policy continuity and structural reform regardless of which party forms the next government.

 

Dr Poj stressed that the new government must engage with the private sector rather than acting unilaterally.

 

"The private sector is the actual engine driving the Thai economy, and the government's role should be to facilitate business rather than just regulate it," he said.

 

The committee is advocating for a "Reinvent Thailand" approach focused on formalising the economy, sustainable debt resolution to boost purchasing power, reducing business obstacles to encourage investment, and strengthening supply chains.

 

The JSCCIB has also launched a "Zero Corruption" campaign, arguing that corruption represents a hidden cost that undermines competitiveness.

 

Kriengkrai cited corruption as a significant factor deterring foreign investment, with companies like Tesla identifying bribery as a major hurdle when considering Thai operations.

 

 

 

Strategic Opportunities

Despite the challenging outlook, the private sector sees significant opportunities in Thailand's role as host for several major international events in 2026.

 

The IMF-World Bank Group Annual Meeting in October, themed "Thailand's New Horizons: Empowering People, Building Resilience", represents a "once-in-a-decade" opportunity to reposition the country globally, according to Payong.

 

"This is the primary mechanism to rebuild trust and confidence among international investors," he said, noting the event's scale will exceed APEC, bringing tens of thousands of delegates including heads of the world's largest corporations.

 

Thailand will also host Gastech 2026, a premier conference on natural gas, LNG, hydrogen energy and climate technology, as well as the Tomorrowland music festival's first Thai edition.

 

The JSCCIB plans to establish a working group to coordinate with the government on preparations for these events, viewing them as crucial platforms to promote Thailand's re-branding and integration into global supply chains.

 

However, success will require swift action to address the structural weaknesses and competitive gaps that have left Thailand lagging behind its regional neighbours.