Bangkok: The Thai economy is anticipated to face increased challenges in the latter half of 2026, primarily due to the uneven recovery of international tourism, sluggish domestic demand, and ongoing external uncertainties impacting confidence and the Thai baht's stability. Standard Chartered Bank (Thailand) forecasts the baht to remain at 32.50 baht per dollar by year-end, with the Bank of Thailand's Monetary Policy Committee expected to maintain the interest rate at 1% until the end of 2027.
According to Thai News Agency, Dr. Tim Leelaphan, a Senior Economist at Standard Chartered Bank (Thailand), highlighted the need for stronger recovery in the tourism sector and more stable household purchasing power. He emphasized that short-term fiscal stimulus measures, while helpful, will not suffice alone. Timely budget disbursement is deemed essential for transitioning from a fragile to a more sustainable economic recovery.
The bank has adjusted its GDP growth forecast for Thailand in 2026 to 1.6 percent, up from 1.4 percent, owing to better-than-expected initial-year growth and governmental cost-of-living relief measures. However, anticipated growth in the second half remains sluggish, with tourism and private consumption being pivotal influencers. The recovery of international tourist numbers has been slower than expected, notably from China. Hotel operators are cautious, having reduced room rates due to a decline in tourist numbers, which are down by 3 percent year-to-date compared to last year, while average hotel occupancy is at 69 percent.
Standard Chartered projects that Thailand's headline inflation will average 1.9% in 2026 and 1.5% in 2027, staying within the Bank of Thailand's target range. Core inflation is expected to remain low, mirroring the sluggish domestic demand. Accordingly, the Bank of Thailand is likely to continue its accommodative monetary policy, with the policy interest rate projected at 1.00% until the end of 2027. The current account balance is anticipated to decrease to 0.2% of GDP in 2026 before improving to 1.5% in 2027, contingent on a strong tourism recovery during peak season. Delays in budget disbursement for fiscal year 2027 could pose a risk to fourth-quarter growth.
While a weaker baht may provide short-term support for exports and tourism through improved price competitiveness, strengthening economic fundamentals is crucial. Dr. Tim emphasized the importance of coordinated policy measures to restore confidence, boost household purchasing power, and maintain economic recovery momentum.
Key risks to Thailand's economic outlook include global economic pressures, geopolitical developments, a potentially weaker-than-expected tourism recovery, domestic political uncertainty, and possible delays in budget disbursement. Despite these challenges, Thailand's macroeconomic stability, manageable public fiscal position, and ongoing policy support measures are expected to mitigate downside risks as the economy seeks a more sustainable recovery.