Thai businesses urged to build resilience as global order shifts

Bank of Thailand (BOT) governor Vitai Ratanakorn has warned that the world is moving away from globalisation and entering an era shaped by geopolitics and geoeconomics, making uncertainty a permanent feature of the business environment.

The central bank continues to forecast that the Thai economy will expand by 2.3% in 2026, although the country’s long-term growth potential has weakened because of structural problems.

Against this backdrop, Vitai urged Thai businesses to strengthen their resilience to withstand emerging risks.

Global uncertainty becomes the new normal

Speaking at the opening of the BOT Southern Region Office’s annual seminar for 2026, titled “How Southern Businesses Can Adapt in an Uncertain World”, Vitai noted that global economic uncertainty had evolved from an occasional disruption into a “new normal”, with major shocks occurring almost every year.

The world has faced the US-China trade war, the Covid-19 pandemic, the Russia-Ukraine war and, most recently, the conflict between the United States and Iran. These events demonstrate that businesses can no longer operate as they did before.

“We cannot escape reality. We have to adapt. We cannot continue as before. The business sector must build flexibility, or resilience,” Vitai told the seminar.

He explained that the era of globalisation, characterised by open and borderless trade, had ended. The world was now entering an age of geopolitics and geoeconomics, in which economic competition is driven by tariffs, divisions between rival power blocs and trade restrictions.

BOT maintains 2.3% GDP forecast as growth potential falls

Vitai noted that the Thai economy was still expected to grow by 2.3% in 2026, above the roughly 2% forecast by several research organisations.

However, the more serious concern was the decline in Thailand’s potential GDP growth rate, which had fallen from 5% to just 2.7%.

The main causes were structural changes in the economy, particularly the ageing population and persistently weak investment over more than two decades.

Vitai illustrated the problem by using 1997 as a base year, with Thailand’s investment level indexed at 100. The country’s investment index has since risen to only 106, compared with 200 in Malaysia and 900 in Vietnam.

The figures highlight Thailand’s limited investment in technology, leaving the country producing many of the same goods as before and steadily losing competitiveness.

Thais Help Thais Plus supports grassroots economy

Vitai revealed that, when global tensions were at their highest in March, the BOT had estimated that Thailand’s economic growth could slow to just 1.5%.

Under that scenario, the non-performing loan ratio could have risen from 2.8-2.9% to more than 4%.

However, the economy has performed better than expected, supported by resilient domestic consumption and a 14% increase in exports of technology products.

“Domestic consumption was stronger than we had anticipated. We have to acknowledge that the Thais Help Thais Plus 60/40 co-payment scheme helped support it,” Vitai stated.

“The scheme has delivered tangible benefits by easing people’s cost-of-living burden, particularly for those at the grassroots level.”

The BOT also expects full-year inflation to come in below its previous projection of 2.8%, after the rate stood at 2.4% in June.

Trade deficits loom despite growth in AI-related exports

The BOT governor acknowledged that Thailand could record deficits in both its trade balance and overall balance of payments this year, despite strong export growth.

Technology and artificial intelligence-related production still relies on imported raw materials and components for as much as 70% of its inputs, limiting the value added generated within Thailand.

“Thailand may no longer be able to record current-account surpluses equivalent to 5-7% of GDP, as it did in the past,” he warned.

“In the longer term, the surplus may remain at only 2-3% of GDP before beginning to recover in 2027.”

Southern economy grows but remains highly vulnerable

Vitai described southern Thailand as a region with considerable potential because of its tourism and agricultural sectors, which have historically enabled its economy to grow faster than the national average.

However, the region remains highly vulnerable because of its heavy dependence on international markets.

Foreign visitors account for 80% of the southern tourism market, with half coming from China and Malaysia. Agriculture represents 32% of the region’s GDP but remains focused on exports of primary commodities with relatively low added value, including rubber, palm oil and durian.

Income inequality is another major concern, with most income concentrated in four provinces: Phuket, Surat Thani, Songkhla and Nakhon Si Thammarat.

Average income in Phuket is seven times higher than in Narathiwat.

BOT intensifies scrutiny of illicit financial transactions

Vitai outlined stricter BOT oversight of financial transactions carrying money-laundering risks or potentially involving illicit funds.

The central bank has instructed financial institutions to monitor purchases of gold through mobile applications that are followed by the immediate withdrawal of physical gold.

Such withdrawals previously reached as much as 4,000 kilogrammes a month, worth more than 16 billion baht. The amount has since fallen to only 700 kilogrammes a month following tighter supervision.

The BOT is also monitoring cash withdrawals exceeding 5 million baht. Suspicious transactions in this category have fallen by 35% within two months.

In the fourth quarter of this year, the central bank plans to introduce an additional requirement for anyone depositing more than 5 million baht in cash to clearly identify the source of the money.

Commercial banks, e-money providers and payment gateways have also been instructed to watch for unusual transactions, including round-number transfers made during the night.

Such transactions could be linked to online gambling, corruption or illicit businesses.

“We do not want any operator under the Bank of Thailand’s supervision to become involved in illegal transactions, illicit funds, online gambling or corruption,” Vitai stressed.

“These are structural problems that undermine the Thai economy.”