Bangkok: The Bank of Thailand (BOT) has revised its economic growth forecast for 2026 to a mere 1.5%, marking the lowest projection in recent years. The BOT has acknowledged that under-potential economic growth is becoming commonplace and emphasized that merely lowering interest rates will not resurrect the robust growth of the past. In response, the BOT is preparing measures to tackle non-performing loans and provide capital support to small and medium enterprises (SMEs) to address these structural challenges.
According to Thai News Agency, Mr. Witai Rattanaporn, Governor of the BOT, highlighted the forecast adjustments during a special address titled “Driving Thailand Toward Sustainable Wealth” at the annual seminar “Thailand Next Move 2026: Wealth Creation” organized by the Financial Banking Journal. He revealed that while the BOT forecasts a 2.2% economic growth for 2025, the estimate for 2026 has been adjusted to 1.5%. A slight recovery to 2.3% is anticipated in 2027; however, the nation’s growth potential is on a decline. The current potential growth rate is approximately 2.7%, and without new investments or potential expansion, Thailand’s maximum growth rate may not exceed this level. This scenario underscores the structural problems plaguing the Thai economy.
The BOT has identified three primary structural issues hindering economic growth: low productivity due to reliance on outdated industries and lack of new investments; low resilience marked by high household and business debt levels; and high inequality, which results in a K-shaped growth pattern where large businesses thrive, but SMEs and the general public struggle, especially with credit access.
The BOT has maintained the monetary policy interest rate, reserving it for essential use. Despite continuous reductions by the Monetary Policy Committee (MPC), the interest rate cuts have shown limited impact on the economy. This has prompted the BOT to adjust its role, employing targeted monetary measures alongside policy interest rates to maintain economic stability and address structural economic issues.
Mr. Witai outlined several initiatives the BOT has undertaken to tackle these structural issues. These include resolving non-performing loans by transferring them to Sukhumvit Asset Management Co., Ltd., implementing a credit cost compensation scheme for new SME loans, promoting financial inclusion for grassroots individuals, and enhancing fairness in the financial system.
The BOT is also closely monitoring the Thai baht’s exchange rate, which has appreciated significantly. In response, the BOT has instructed commercial banks to tighten document verification for foreign exchange transactions linked to gold and is considering regulatory measures to manage currency volatility.
Moreover, the BOT is investigating high trading volumes of digital currency USDT and their potential impact on the baht, although current transactions do not directly affect the currency. The BOT remains vigilant about the risks that could arise from illicit fund sources and unauthorized dollar exchanges.