Businesses urge government to ditch quick fixes as economy loses second-half steam

Thailand’s economy is heading into the second half of 2026 under deeper pressure, with private-sector leaders warning that headline growth in exports and GDP has failed to translate into a broad-based recovery.

Business groups, industrialists, property developers, retailers and economists say the economy remains trapped in a K-shaped pattern, where large firms and new industries continue to grow while SMEs, traditional manufacturers and lower-income households lag behind.

The message from the private sector is increasingly clear: the government must move beyond short-term relief and focus on restoring confidence, reviving tourism, drawing fresh investment and tackling structural weaknesses that are holding back long-term competitiveness.

Tourism confidence and the baht

Dr Poj Aramwattananont, chairman of the Thai Chamber of Commerce and the Board of Trade of Thailand, said the government’s most urgent task over the next six months was to rebuild a sense of safety and confidence in order to bring back Chinese and other foreign visitors.

He said Thailand’s original target of 40 million international arrivals was now at risk, with arrivals potentially falling to around 33 million if confidence is not restored.

On exports, Poj said the Bank of Thailand should manage baht stability carefully and keep the currency moving in a direction that supports competitiveness. He noted that the baht had strengthened more than other Asean currencies last year, adding pressure on exporters.

He said Thailand could still navigate the next two to three years if political stability is maintained and key economic priorities are driven as a national agenda.

K-shaped recovery raises reform pressure

Thawatchai Setthachinda, committee sSecretary-general of the Thai Chamber of Commerce, said Thailand’s first-half economic figures did not fully reflect the difficulties facing smaller businesses and grassroots workers.

Although exports and GDP continued to expand, the benefits had not spread evenly, he said. Large businesses and new industries were expanding, while SMEs and traditional sectors remained weak, leaving domestic purchasing power under pressure.

For the second half of the year, the private sector expects GDP growth of 1.6-2.0% in 2026. Thawatchai urged the government to accelerate structural reform in four areas: trade, regulation, business facilitation, human-capital development and investment.

He said Thailand’s role as host of major global forums, including meetings linked to the World Bank, the IMF and the AEC Business Forum, should be used to rebuild investor confidence and present the country as a destination for sustainable long-term growth.

Factories still waiting for recovery

Panitarn Pavarolavidya, secretary-general of the Federation of Thai Industries, said Thailand’s economy was still expanding unevenly.

He said GDP and export growth were being driven mainly by foreign investment in digital industries, electronics and data centres, while many Thai operators, especially SMEs and traditional factories, continued to struggle with high costs, cheaper imported goods and low capacity utilisation.

In some sectors, production capacity has fallen below 60%, he said.

Panitarn said the second half of the year would remain volatile, with external risks including the global economic outlook and energy prices. However, he said stimulus measures and public-private cooperation through the Joint Public-Private Sector Consultative Committee could help support businesses and allow smaller operators to begin recovering over the next three to six months.

Government spending must reach the real economy

Yodsakorn Follett, chief executive officer of XSpring Asset Management, said the Thai economy still had room to recover in the second half if government stimulus measures proceed as planned.

He said projects must be designed to generate a real multiplier effect and push money into the wider economy, rather than creating only short bursts of spending.

A key factor, he said, would be the government’s 400-billion-baht borrowing plan. If the funds are channelled into projects that create actual spending and can be linked meaningfully with the “Thais Help Thais Plus” scheme, they could help support economic activity in the third and fourth quarters.

Tourism would remain another crucial driver, especially if foreign arrivals stay high and visitor spending increases. Stronger tourism activity would spread income to hotels, restaurants, retailers, transport operators and service businesses in tourist destinations.

Short-term relief is not enough

Asst Prof Dr Kiatanantha Lounkaew of Thammasat University’s Faculty of Economics said the current “Thais Help Thais Plus” policy was more of a support measure than a sustainable stimulus package.

He said its fiscal multiplier was limited and that money often circulated only briefly before flowing back to large businesses.

What the government should do in the second half, he said, is provide targeted support to SMEs in order to preserve employment and expand the tax base. He added that the government must be firm enough to prioritise businesses that are capable of recovering first, so they can become a base for others to follow.

Property sector calls for clearer direction

Dr Kessara Thanyalakpark, managing director of Sena Development, said Thailand continued to face economic challenges as global growth slowed.

She said the bigger issue was not short-term recovery, but the need to raise Thailand’s long-term competitiveness after years of stagnation. Neighbouring countries have been moving faster and are now competing more strongly, she said.

Kessara urged the government to set a clear economic direction, address structural problems and rebuild confidence among businesses and investors.

Uthai Uthaisangsuk, president of Sansiri, said the second half would still be pressured by prolonged geopolitical conflict, which affects construction and transport costs, as well as a domestic recovery that remains gradual.

Although exports and tourism have started to show signs of improvement, he said they are still not strong enough to create a significant shift in the overall economy.

Investment and confidence seen as key

Korn Narongdej, chairman of the executive committee of Raimon Land, said the Thai economy was showing some signs of recovery, but GDP growth remained lower than that of many regional peers.

He said the main obstacle was not only economic weakness, but uncertainty, which was causing consumers and investors to delay decisions. As a result, money circulating in the economy has declined and economic activity has slowed.

Korn said Thailand’s recovery would need support from both foreign investment and domestic consumption. The government should build confidence through clear and consistent policies, while using Thailand’s strengths in tourism, culture and international appeal to improve competitiveness.

If investment and tourism can be pushed forward together, he said, they could become important engines for money circulation and broader recovery.

Retailers warn purchasing power may stay weak

Somchai Pornrattanajaroen, honorary advisor of the Thai Wholesale and Retail Trade Association, said the second-half outlook remained worrying, with purchasing power likely to stay weak.

He cited pressure from foreign online platforms, living costs, drought and structural problems, warning that the economy could continue slowing for several years if the government does not address problems more directly.

Patt Pongwittayapipat, general manager of The Pizza Company, said some costs had eased because of lower fuel prices, but consumers were still spending cautiously. Many were focusing on value-for-money products and smaller items, forcing operators to adjust strategies and expand only in locations with strong potential.

Kitja Wongwaree, chief executive of Aroma Group, said the Thai economy was in a “reset” period and could take around three years to recover clearly.

He said household debt, the property sector and global uncertainty would continue to weigh on the economy. While government stimulus may help support spending in the short term, a sustainable recovery will depend on the return of consumer confidence and purchasing power.

Taken together, the private-sector warnings point to an economy that is still moving, but unevenly and without enough momentum. The second half of 2026 is therefore likely to test whether Thailand can turn temporary support into deeper reform, renewed confidence and a more inclusive recovery.

Source: Thansettakij