Thai GDP grows 2.8% in Q1 as NESDC warns of cost-of-living pressure
Thailand’s economy grew 2.8% in the first quarter of 2026, while NESDC kept its full-year growth forecast at 2%.
Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC), on Monday released the report on Thailand’s economic performance in the first quarter of 2026 and the outlook for the full year.
He said the Thai economy expanded by 2.8% in the first quarter of 2026, accelerating from 2.5% growth in the fourth quarter of 2025 and performing better than expected.
The improvement was driven by continued expansion in most economic indicators. Total investment grew strongly by 9.9%, accelerating from 8.1% in the previous quarter and marking the highest growth rate in 44 quarters, or since the first quarter of 2015.
Private investment grew by 10.1%, up from 6.5% in the previous quarter, while public investment expanded by 9.4%, slowing from 13.3% in the previous quarter.
On international trade, merchandise exports were valued at US$95.096 billion, up 17.8%, accelerating from 9.4% in the previous quarter. The strong growth was driven by industrial exports, particularly electronics and electrical appliances, in line with demand in global markets.
Agricultural exports declined due to price competition among exporting countries in the global market, while the volume of agricultural exports also fell.
The export price index rose by 2.3%, continuing from 1% growth in the previous quarter. Exports to most major markets continued to expand, including the United States, China, ASEAN and the European Union, while exports to the CLMV markets, the Middle East and South Korea declined.
Imports were valued at US$95.399 billion, up 33.1%, accelerating from 17.5% in the previous quarter and marking the highest growth in 18 quarters.
Import volume rose by 25.7%, while import prices increased by 5.9%. As a result, Thailand recorded its first trade deficit in 14 quarters, at 6.9 billion baht, compared with a surplus of 44 billion baht in the previous quarter.
NESDC warns of cost-of-living crisis
Danucha said that Thailand previously imported about 46% of its crude oil from the Middle East. However, following the recent situation in the region, Thailand has turned to other sources, including the United States and Africa, which has increased transport times, while prices remain high.
Although NESDC expects the conflict to end by the middle of this year, energy prices are likely to remain elevated, including both oil and natural gas.
This will affect several economic sectors, including fisheries, transport and the chemical industry. The impact is expected to feed through to inflation and household living costs in the period ahead.
Danucha said the government must therefore move quickly to address living costs. If the situation does not end, Thailand could face a cost-of-living crisis in the next phase.
Latest economic stability indicators
On economic stability, the unemployment rate stood at 0.91%, higher than 0.70% in the previous quarter and 0.89% in the same quarter last year.
Headline inflation remained negative for a fourth consecutive quarter at -0.5%, while core inflation averaged 0.6%.
The current account recorded a surplus of US$3.2 billion, or 101.6 billion baht.
International reserves at the end of March 2026 stood at US$280.5 billion, while public debt at the end of March 2026 totalled 12.68 trillion baht, equivalent to 66.38% of GDP.
Thai economic outlook for 2026
NESDC expects the Thai economy in 2026 to grow within a range of 1.5-2.5%, with the midpoint forecast at 2%.
Key supporting factors include:
- Continued expansion in private consumption and private investment.
- An increase in the government budget framework, covering both current and investment expenditure, as well as the emergency decree authorising the Finance Ministry to borrow.
- Continued growth in exports.
NESDC expects private consumption and private investment to expand by 2.4% and 3.7%, respectively.
Export value in US dollar terms is forecast to grow by 9.6%, average inflation is expected to be in the range of 2.0-3.0%, and the current account is projected to record a surplus of 1% of GDP.
Recommendations for macroeconomic policy management in 2026
NESDC recommended that macroeconomic policy management in 2026 should focus on the following areas:
1. Measures to ease the impact of the Middle East conflict
Measures should be implemented to mitigate the impact of the conflict in the Middle East amid a situation that remains highly uncertain.
Priority should be given to managing energy security in preparation for a possible prolonged conflict, implementing targeted measures to support businesses affected by rising energy costs, closely monitoring the adequacy of raw materials in the manufacturing sector to prevent shortages, and promoting the energy transition and adaptation towards a low-carbon society.
2. Driving private investment
Private investment should be promoted, particularly investment projects that have already received investment promotion certificates but have yet to move into actual investment.
Priority should be given to facilitating investment and removing investment obstacles, developing an ecosystem that supports investment, and creating spillover benefits from foreign investment for domestic businesses.
3. Maintaining export growth
Efforts should be made to maintain continued export growth, with a focus on reducing the impact of US trade barriers.
Thailand should prepare for the investigation process under Section 301 and guard against the risk of measures under Section 201 of the Trade Act of 1974.
The country should also expand economic cooperation and develop new markets to diversify risks, while building knowledge and understanding of key measures by trading partners that will take effect in 2026-2027. These include US trade measures, the European Union’s Carbon Border Adjustment Mechanism (CBAM), and the EU Deforestation Regulation (EUDR) on imports of goods linked to deforestation.
Thailand should reduce production and business operating costs, while improving laws and regulations and helping businesses adapt to modern trade measures, especially those related to the environment, to align with the standards of key trading partners.
Entrepreneurs should also be encouraged to place importance on logistics management so that Thai goods can continue reaching major markets, particularly the Middle East and long-distance markets where transport costs have increased.
4. Maintaining public spending while preserving fiscal discipline
Public spending should continue to support the economy while fiscal discipline is maintained.
Priority should be given to accelerating disbursement of the fiscal 2026 budget to no less than 90.7% of the total budget, especially investment expenditure, which should be disbursed at no less than 70% of the total budget.
The fiscal 2027 budget should be prepared so that it can take effect on schedule. Agencies should also be urged to prepare important investment projects so they can begin implementation and disbursement from the start of the fiscal year.
Investment expenditure in the first quarter of fiscal 2027 should be disbursed at no less than 30% of the total budget.
The budget under the emergency decree authorising the Finance Ministry to borrow 400 billion baht to address the impact of the energy crisis and support Thailand’s energy transition in 2026 should be managed in line with the objectives of the law. Implementation should be efficient, prudent and consistent with actual economic conditions and circumstances.
At the same time, sufficient fiscal space should be preserved to cope with future uncertainties, including the Middle East conflict, trade-restrictive measures and climate change.
This should be done through clear and concrete approaches to reducing the fiscal deficit and lowering the public debt ratio, in order to preserve fiscal space and the country’s credit rating in the period ahead.
5. Supporting the agricultural sector
The impact on the agricultural sector from rising prices of agricultural raw materials and climate change should be addressed.
Thailand should urgently seek alternative import sources to offset imports of urea fertiliser from the Middle East, while promoting the use of tailor-made fertilisers or organic fertilisers to reduce reliance on foreign imports.
The impact of rising energy costs should also be eased, both for the use of agricultural machinery and the transport of agricultural goods.
Water resources for agriculture should be managed carefully, particularly by ensuring sufficient water reserves for cultivation and preparing for the risk of dry spells and drought caused by the expected impact of a super El Niño phenomenon in the second half of 2026, which could affect main-crop rice cultivation in the 2026/27 crop year.
6. Addressing access to credit for businesses and households
Problems in access to credit for businesses and households should be addressed.
Priority should be given to reducing pressure from non-performing loans in the household sector, providing financial support to viable SMEs that face liquidity constraints and are further affected by the Middle East conflict and trade-restrictive measures.
Concrete and sustainable measures to resolve household debt should also be accelerated in the period ahead.
Financial awareness should be promoted, particularly attitudes towards spending planning to prevent excessive debt, while strengthening risk management to prepare for emergencies.
