Abstract
SCB EIC has downgraded Thailand’s economic growth forecast for 2026 to 1.4% due to the escalating Middle East war impacting energy prices and inflation, projected to average 3.2%. Domestic consumption may slow as household purchasing power declines amidst rising costs. The economy faces “triple deficits” risks and potential stagflation. Tourism and trade are expected to suffer, while businesses face higher costs and supply chain disruptions. The monetary policy will remain cautious, potentially considering targeted measures to support affected sectors while managing energy prices effectively.
Summary
Thai Economic Growth Outlook
SCB EIC has lowered Thailand’s 2026 economic growth forecast to 1.4%, down from 1.8%. This revision is attributed to the ongoing Middle East conflict, which has pushed energy and commodity prices higher. Inflation is anticipated to rise sharply, averaging 3.2% for the year, exceeding the Bank of Thailand’s target. Domestic spending, particularly private consumption, is expected to decline as households face weakened purchasing power amid escalating costs.
Impacts of the Middle East Conflict
The Middle East war has severely disrupted oil transport, leading to price spikes and concerns over prolonged energy supply issues. SCB EIC outlines three scenarios regarding the crisis, with Brent crude prices potentially ranging from USD 85 to USD 120 per barrel depending on the conflict’s duration. These developments threaten macroeconomic stability, raising risks of a current account deficit and diminishing investor confidence.
Recommended Policy Framework
To navigate these challenges, the government should adopt a “3T” framework—Targeted, Temporary, and Transform. This involves providing support to the hardest-hit sectors, managing energy prices to ensure gradual adjustments, and boosting investment in renewable energy. Emphasizing these strategies can fortify Thailand’s economic resilience while minimizing the crisis’s short-term impacts, especially as global growth slows.
Source : Outlook quarter 1/2026
