Bangkok: The Bank of Thailand reports that ongoing conflicts in the Middle East are starting to influence Thailand's economic landscape in multiple ways.
According to Thai News Agency, the Bank of Thailand (BOT) has identified significant impacts, such as increased energy costs, a slowdown in tourism, rising logistics expenses, and a decline in business confidence. These developments demand close monitoring to understand their full effects on the Thai economy.
Ms. Chayawadee Chaiyanan, the Assistant Governor for Corporate Relations and Spokesperson of the BOT, highlighted that rising energy prices are increasingly evident, affecting production, transportation, and living costs. The production costs have consistently been the primary challenge for businesses over the past eight months. Other challenges include economic uncertainty, difficulties in price adjustments, weak domestic demand, and strong domestic competition, all contributing to decreasing business confidence in current and future projections.
The tourism sector is experiencing a downturn, particularly with a drop in visitors from the Middle East and Europe. This decline is attributed to air travel restrictions and uncertainty, leading to fewer flights and reduced foreign passenger arrivals in Thailand. Consequently, hotel and flight bookings have seen cancellations in some areas, with preliminary data for March indicating a potential 6-7% decrease in foreign tourist numbers compared to the previous month.
In the freight sector, maritime transport, a critical indicator, shows signs of deceleration. The volume of goods shipped by sea to the Middle East and Central Asia has decreased, while the freight rate index has risen, indicating higher transportation costs and logistical risks that may affect future export and import costs.
Additionally, geopolitical factors have caused volatility in global financial markets, weakening the Thai baht in March. This coincides with the strengthening of the US dollar and capital flows, raising concerns about Thailand's high dependence on energy imports.
For the overall economic outlook in February 2026, the BOT reported a slowdown in key economic drivers compared to the previous month. Goods exports (excluding gold) decreased by 2.3 percent, industrial production by 2.1 percent, and private consumption by 1.8 percent. The tourism sector also slowed, with foreign tourists numbering 3.3 million, a decrease of 1.8 percent. However, private investment and government spending continued to grow. The headline inflation rate turned more negative due to supply-side factors, while core inflation remained stable, and the current account surplus widened.
The Bank of Thailand warns that the Thai economy faces downside risks from the Middle East conflict, particularly through rising energy prices, increased logistics costs, and a slowing tourism sector. It emphasizes the need to monitor conflict developments, business and public adaptability, government measures, and changes in major economies' trade policies, especially those of the United States.