TRIS Rating warns Thailand’s 2026 growth could drop to 1% if Iran war lasts six months

TRIS Rating said that while it still forecasts Thailand’s GDP growth at 2.1% in 2026, the Middle East conflict poses significant downside risks. Under a scenario where the conflict lasts three months (Scenario 1), growth could slow to 1.8%. If it extends to six months (Scenario 2), growth could fall further to 1.0%.

The agency said prolonged geopolitical tensions would weigh on private consumption, goods exports, tourism, and foreign direct investment (FDI).

Under the stress scenarios, TRIS expects inflation to increase. It said government measures should help limit near-term pass-through from higher oil prices, but inflation is still projected to rise well above its current forecast of 0.0%-0.5%.

TRIS expects average Dubai crude prices in 2026 to rise to about US$90 a barrel in Scenario 1 and about US$100 a barrel in Scenario 2. While government price controls on diesel and LPG may soften the impact, inflation is still projected at around 3% in Scenario 1 and 4%-5% in Scenario 2.

TRIS said higher jet fuel costs and airfare increases pose a negative risk to tourist arrivals, with the impact expected to be greater than during past geopolitical episodes.

It projects foreign tourist arrivals could fall from a baseline of 35 million to around 33 million in Scenario 1 and 32 million in Scenario 2. Disruption at Gulf airports and higher jet fuel prices are expected to push airfares higher by about 10%-15% in Scenario 1 and 15%-20% in Scenario 2.

TRIS expects Thailand’s policy interest rate to remain at 1.0% under both scenarios. Although inflation would be higher, it said the pressure is expected to come mainly from cost-push factors rather than stronger demand.

The baht is projected to weaken slightly against a stronger US dollar, with TRIS estimating levels of around 32.5 baht per US dollar in Scenario 1 and 33.0 in Scenario 2.