IMF upgrades Thailand, ADB trims Asia-Pacific growth amid energy crisis

The International Monetary Fund (IMF) has signalled that Southeast Asia’s economy is facing pressure from higher energy costs and slower global demand, even as Thailand receives a modest growth upgrade from its role in the global technology supply chain.

In its latest World Economic Outlook Update, the IMF forecast that the ASEAN-5 economies — Indonesia, Malaysia, the Philippines, Singapore and Thailand — would expand 4.1% in 2026, slowing from 4.5% in 2025, before recovering to 4.3% in 2027.

However, the IMF said the impact of the energy shock was uneven across countries. Economies closely linked to the global technology value chain have remained more resilient, supported by demand for artificial intelligence and semiconductors.

The IMF identified Taiwan, South Korea, Thailand and Malaysia as the world’s four largest net exporters of AI-related hardware. It also said Thailand’s 2026 growth forecast had been revised up by 0.4 percentage point to 1.9%, supported by emergency fiscal measures, robust technology-related exports and investment. Vietnam’s forecast was also raised by 0.4 percentage point to 7.5% on stronger-than-expected technology exports and domestic demand.

The IMF now projects Thailand’s economy to grow 1.9% in 2026 and 2.2% in 2027, reflecting the country’s ability to benefit from technology exports, investment and the expansion of data-centre-related activity even as the wider region faces higher energy costs.

The IMF also lowered its global growth forecast for 2026 to 3.0%, while warning that risks remain linked to the Middle East conflict, trade fragmentation and possible corrections in AI-related market expectations. Global headline inflation is forecast at 4.7% in 2026, with energy prices estimated to be 25% higher than before the war began.

The IMF’s assessment came as the Asian Development Bank (ADB) also lowered its 2026 outlook for developing Asia and the Pacific, citing prolonged energy-market disruption and supply-chain pressure.

In its latest Asian Development Outlook July 2026, ADB forecast that developing Asia and the Pacific would grow 4.9% in 2026, down from 5.5% in 2025 and 0.2 percentage point lower than its April projection. The forecast for 2027 was maintained at 5.1%.

ADB said disruption from the Middle East conflict had raised production costs and dampened economic activity, while also affecting energy, fertilisers, commodities and supply chains. Its regional inflation forecast for 2026 was also revised upward, with the bank warning that renewed escalation of conflict and prolonged geopolitical uncertainty remained key risks.

ADB Chief Economist Albert Park said growth in developing Asia and the Pacific remained resilient, but persistent headwinds meant policymakers needed to balance support for growth with efforts to contain inflation.

For Southeast Asia, the twin outlooks from the IMF and ADB point to a more complicated economic environment. Higher fuel and import costs are weighing on household purchasing power, business margins and government policy space. At the same time, technology-linked exporters and economies with strong investment pipelines are showing greater resilience.

Thailand stands out in this context because it is increasingly connected to high-value technology supply chains. The IMF’s upward revision reflects the country’s growing exposure to technology-related exports and investment, including electronics, AI-linked hardware and data-centre expansion.

The ADB report, meanwhile, underlines the need for regional economies to strengthen energy security, diversify supply chains and manage inflation carefully. For Thailand, the findings reinforce the importance of accelerating investment in clean energy, logistics, advanced manufacturing and digital infrastructure.

Despite a weaker regional outlook, both institutions suggest that Asia remains one of the world’s more resilient growth regions. The challenge is that resilience now depends less on low-cost production alone and more on energy preparedness, policy agility and participation in future industries.

For Thailand, the message is mixed but constructive: external pressures are real, but the country’s position in technology manufacturing and digital infrastructure is giving it a stronger foothold in a changing global economy.

Source: ADB