Thailand chartbook: Middle East shock tests economy
We raise our 2026 GDP growth forecast to 2.1%, reflecting the less severe-than-expected impact of the Middle East conflict and policy support amid ongoing challenges.
Group Research - Econs, Chua Han Teng18 Aug 2026
  • Real GDP growth slowed to 1.9% yoy in 2Q26 (1Q26: 2.8%) due to headwinds from the Middle East shock.
  • Private consumption would receive a temporary boost from government stimulus after weak 2Q growth.
  • Foreign tourism is soft, with a sustained recovery dependent on the year-end seasonal demand.
  • Goods exports and private investment continue to stand out as bright spots.
  • We continue to expect the BOT to keep its policy rate stable at 1.00% through the remainder of 2026.
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GDP growth slowed to 1.9% yoy in 2Q26 from a strong 2.8% yoy in 1Q, bringing 1H26 growth to 2.4% yoy. We raise our 2026 growth forecast to 2.1%, due to a less severe-than-expected Middle East shock and policy support.

Overall economic weakness in 2Q26 was driven by slower private and government consumption growth, despite strong investment expansion. Private consumption growth eased to its lowest rate since the end of 2021, but could be supported by government stimulus introduced from June 2026. While visitor arrivals rebounded in July 2026, sustained momentum into the year-end peak season will be key to support the recovery. Goods exports remain in solid shape and are providing strong support to the economy in 2026 amid global artificial intelligence tailwinds, while the investment upcycle remains intact in 2Q26, with growth sustaining strong momentum at close to its highest rate since 1Q15.

We think the Bank of Thailand (BOT) will have little urgency to adjust policy in the near term. The Midde East shock is weighing on growth and lifting inflation. The BOT will aim to support growth, which is low and uneven, as it expects inflation to ease alongside energy prices.



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Chua Han Teng, CFA

Senior Economist - Asean
hantengchua@dbs.com

 
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