NESDC maintains 2026 Thai growth forecast amid high uncertainty

The National Economic and Social Development Council (NESDC) has maintained its 2026 Thai economic growth forecast at 1.5-2.5%, with a midpoint of 2%.

Although the Thai economy expanded by 2.8% in the first quarter, accelerating from 2.5% in the fourth quarter of the previous year, uncertainty remains very high for the rest of 2026.

Ekniti Nitithanprapas, Minister of Finance, said first-quarter growth was satisfactory, particularly total investment, which rose 9.9%, and private investment, which expanded by more than 10.1%.

Exports also continued to grow at a good pace.

However, the economy in the next phase would be affected by inflationary pressures as goods prices gradually adjust in line with higher oil costs.

The global economy also faces risks, as reflected in sharply higher long-term bond yields in several countries, especially the United States, amid concerns that inflation will increase after a sharp rise in oil prices.

Preparing for a cost-of-living crisis

The domestic economy will begin to face a “cost-of-living crisis” caused by higher goods prices, which could lead to a crisis of business closures and lower employment.

The government has sought to prevent the risk by launching the Thai Chuai Thai Plus programme to ease living costs for the public.

Danucha Pichayanan, Secretary-General of the NESDC, said the economy for the rest of this year, especially the second half, remains highly uncertain because this crisis stems from the situation in the Middle East.

The conflict involving the United States, Iran and Israel remains uncertain in terms of how it will end, while much energy infrastructure has been destroyed, meaning oil and energy prices are likely to remain at high levels for quite some time.

Amid the highly uncertain economic situation this year, the NESDC said there are four economic risks to monitor and six areas to which the government should give priority in managing the economy.

Key details are as follows:

1. Geopolitical crisis in the Middle East. The prolonged conflict is affecting energy production sources and shipping through the Strait of Hormuz, pushing the average Dubai crude oil price to US$117.2 per barrel in March-April, compared with US$67.5 before the incident. This has pushed the Producer Price Index (PPI) in April up by 9.1% and affected the cost of key raw materials such as naphtha, ethane and urea fertiliser, which will affect agricultural costs in the next phase.
2. A slowdown in the global economy and financial volatility. It is necessary to monitor US trade barriers, particularly the possibility that high import tariffs on China will return after Tuesday (November 10, 2026), as well as a higher-for-longer interest rate policy if inflation returns to high levels. Attention must also be paid to the weakness of China’s economy and to Hantavirus, which could affect tourism and goods exports if it spreads widely.
3. Household debt and SME credit quality. The household debt-to-GDP ratio rose again in the fourth quarter of 2025 amid tighter lending by financial institutions, which is a constraint on the recovery of domestic demand and a factor limiting economic growth this year.
4. Climate volatility. Although the current volume of water in reservoirs is 20.3% above the five-year average, El Niño is expected to occur in the second half of 2026. It would cause severe drought affecting the output of main-crop rice, cassava and maize, which are key economic crops affecting farmers’ incomes.

Six-point plan for economic management in the second half

To ensure that the Thai economy continues to move forward steadily, the NESDC proposed six macroeconomic policy management issues to which the government should give priority:

1. Focus on energy security by securing diverse reserve sources and implementing targeted measures for groups highly dependent on energy, such as transport, fisheries and construction, while accelerating the transition to clean energy through Direct PPA and Smart Grid systems.
2. Accelerate private investment through the Thailand FastPass system to facilitate investment and address obstacles, particularly in new-technology industries such as AI and robotics, while encouraging SMEs to enter global production chains.
3. Drive exports by preparing for environmental measures such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) and the EU Regulation on Deforestation-free Products (EUDR), which bans imports and exports of goods linked to deforestation or forest degradation. The government should also accelerate free trade agreement (FTA) negotiations with the European Union, South Korea, Pakistan and Turkey so they are completed quickly, to diversify risk into new markets.
4. Maintain fiscal discipline by targeting fiscal 2026 budget disbursement of at least 90.7%, including investment budget disbursement of at least 70%, and by efficiently managing THB400 billion in loans to address the energy crisis to preserve fiscal space for future crises.
5. Support farmers affected by drought by quickly finding alternative sources of fertiliser raw material imports to replace the Middle East, and prepare for “super El Niño” in the second half by managing water to ensure enough supply for the new planting season.
6. Address access to credit by acting proactively through the “Close Debt Fast, Move On” measure to help small debtors restructure debt, and improve the household debt database so it is comprehensive enough to support sustainable debt solutions.