Bangkok: The Federation of Thai Industries (FTI) has issued a warning that Thailand is set to encounter an economic storm in 2026, necessitating accelerated national structural reforms.
According to Thai News Agency, FTI President Mr. Kriengkrai Thianukul has assessed the outlook for the Thai economy and industry, predicting continued pressure from global economic volatility, geopolitical tensions, and stricter trade and environmental policies. These elements, coupled with internal structural limitations, create a "perfect storm" that threatens the competitiveness of Thailand's industrial sector.
The Joint Committee of the Three Private Sector Institutions (JCC) estimates a modest growth rate of 1.6-2.0% for the Thai economy in 2026, slightly down from the projected 2.0% growth in 2025. This slowdown is attributed to pressures on production, employment, and domestic purchasing power, particularly in the manufacturing sector, where the Manufacturing Production Index (MPI) is not keeping pace with export growth.
Key issues affecting the Thai economy include smuggling, transshipment, and the influx of inexpensive foreign goods, which have eroded the competitiveness of Thai manufacturers. Data from the Office of Industrial Economics indicates that many industries are operating at capacity utilization rates below 60%, significantly lower than the typical 70-80%, highlighting the vulnerability of the manufacturing sector.
Thailand's export structure heavily depends on low value-added products, and the appreciating Thai baht, alongside environmental regulations from trading partners, increases business costs. This is particularly challenging for SMEs, which often lack sufficient capital, technology, and personnel.
However, there are positive signs in 2026 from investments in target industries such as digital, electric vehicles, electronics, processed food, and clean energy. Investment promotion applications in the first nine months of 2025 reached over 1.3 trillion baht, with foreign investment surpassing 980 billion baht, indicating strong investor confidence in Thailand's potential.
Mr. Kriengkrai emphasized the necessity for Thailand to restructure its economy under the "Reinvent Thailand" concept, transitioning from original equipment manufacturing to high value-added industries. This includes promoting technology, innovation, automation, and clean energy to enhance labor productivity and competitiveness. He also highlighted the need for government support in R and D, technology transfer, SME development, and prioritizing local products in government procurement.
The urgent need for regulatory and bureaucratic reform, as well as measures to combat corruption, was also stressed. Promoting the BCG Model and eight target bio-industries could leverage Thailand's bio-resource base. Expediting FTA negotiations, developing infrastructure, and prioritizing water management are also essential.
Human resource development is crucial, with an emphasis on upskilling, reskilling, and developing new skills, particularly in STEM fields, through collaborations between the government, industry, and educational institutions.
2026 presents both challenges and opportunities for Thailand, requiring a focus on enhancing competitiveness, resilience, and sustainability within the CRS framework. The concept of "ONE Thailand" urges all sectors to transform global pressures into opportunities for stable and sustainable economic growth.