Bangkok: Amidst what business leaders are describing as a "perfect storm," a combination of extreme heat and a severe economic crisis, the Thai economy in the first quarter of 2026 is being closely watched in comparison to neighboring countries that are showing outstanding growth figures. Dr. Amorntep Javalaw, Senior Vice President of CIMB Thai Bank, provides an overview of the situation and possible solutions for the Thai economy.
According to Thai News Agency, Dr. Amorntep stated that the Thai economy in the first quarter is expected to grow by less than 2%, or approximately 1.7%, compared to the same period last year. This is a worrying figure when compared to countries in the same region such as Singapore, Malaysia, and Indonesia, which have been able to grow by 4-5% despite facing similar external factors. When considering a quarter-on-quarter approach (compared to the fourth quarter of last year), the Thai economy shows a negative trend, reflecting a clear slowdown after the expiration of economic stimulus measures at the end of last year. The main factors dragging this down are the delays in the upcoming election, the delay in government budget allocation, and weakened purchasing power due to soaring oil prices stemming from the conflict in the Middle East.
Typically, the second and third quarters in Thailand are the weakest periods for the economy, often referred to as the "belly of the elephant" phase, due to the rainy season and the increased back-to-school expenses for parents. This year, the situation may be more severe due to high household debt and slow agricultural income growth. Furthermore, the tourism sector, once a key driver of the economy, may not be able to fully support it due to rising long-distance travel costs, causing tourists from Europe and America to delay their travel plans. Meanwhile, Chinese tourists are beginning to opt for domestic travel or other ASEAN destinations instead of Thailand.
Although the overall picture appears sluggish, Dr. Amorntep still sees a glimmer of hope in the second half of the year, supported by certain factors. Accelerating budget disbursement and issuing an emergency decree for borrowing 400 billion baht will be key drivers in maintaining purchasing power and stimulating the economy for the remainder of the year. Thailand remains a prominent target for digital industries, data centers, electric vehicles (EVs), and electronics. A clear example is TikTok's application for investment promotion for its data center, involving an investment of over 800 billion baht. Although overall GDP figures may be low, some sectors remain strong. The diversified structure of the Thai economy, encompassing industry, services, and agriculture, acts as a buffer against volatility.
CIMB Thai Bank projects Thailand's overall economic growth for the year at 1.4%, with low growth in the first half and accelerating in the second. The key challenge for Thailand is not just short-term stimulus, but to boost its growth potential to 3% through economic restructuring, improving labor efficiency, and accelerating free trade agreement (FTA) negotiations with various countries. However, Dr. Amorntep concluded that even facing a "perfect storm," with proper liquidity management and clear policies, the Thai economy can recover gradually, following the global economic recovery trend towards the end of the year.