Krungsri Research forecasts that the Thai economy will grow by only 2.0% this year, a slowdown from the 2.4% growth projected for 2025. This is due to several key economic engines showing signs of weakening, although tourism and private investment still have growth potential.

Dr. Pimnara Hirankasit, Head of Economic Research and Head of Research at Krungsri Bank, revealed that overall, the Thai economy in 2026 will be a year of stabilization amidst various pressures, but there are still promising drivers. The Thai economy will benefit from tourism, foreign investment, and some domestic demand, but it will face several significant risks and challenges, including: (i) escalating global trade tensions, uncertainty surrounding US import tariffs, and geopolitical risks; (ii) a surge of Chinese goods into the Thai market, potentially accompanied by imports of US goods under the expected continuation of the trade agreement, increasing the risk of a twin influx and putting pressure on several Thai manufacturing sectors; and (iii) weather variability, which may lead to an El Ni?o phase sooner than expected.

This will impact productivity and farmers' income, including (iv) structural problems such as high household debt, an aging population, and the declining competitiveness of some industries. While government spending and recovering confidence after the election may provide some support to the economy, the relatively limited fiscal space, the uncertain timeline for government formation, and the risk of delays in the enactment of the 2027 budget may limit the upward revision of Thailand's economic growth forecast. All of this reflects an economic picture that, while still moving forward, requires careful management to cope with pressures from various sides in 2026.

ASEAN Regional Economic Outlook in 2026: The overall ASEAN economy continues to grow. The ASEAN economy in 2026 is expected to grow at a level similar to the previous year, driven by continued domestic demand from fiscal stimulus measures and monetary easing in the past, as well as continued tourism growth. In addition, exports are expected to benefit from the global technology cycle, although it may slow down somewhat after the accelerated export growth in the previous year due to uncertainty regarding US import tariffs. In addition, ASEAN faces challenges from uncertainty in global trade and investment policies, coupled with challenges from specific domestic factors.

In particular, concerns about the credibility of the Indonesian government and the crackdown on corruption in the Philippines may continue to pressure public investment and private sector confidence. However, foreign direct investment remains a driver of the ASEAN economy in the medium term, even though the region's cost advantage may be diminished by US import tariffs and risks from regulations related to transshipment tariffs. Nevertheless, the unique strengths and policies to accelerate the development of quality factors in each country, as well as the benefits from regionalization under the trend of supply chain diversification from China, reflect that ASEAN still has the potential to attract investment amidst uncertainty and risks in the future.

The tourism sector is recovering but not at full potential. Tourism remains a hope to help support the Thai economy. In 2026, the number of foreign tourists is expected to reach 35.5 million, an increase from approximately 33.0 million in 2025. Indicators reflecting the recovery include the increased number of flights into Thailand during the winter season of 2025/2026 (October 26, 2025 – March 28, 2026), as well as the expansion of new flight routes from both China and India. However, the recovery is still relatively slow. In particular, concerns about safety and intense competition from other Asian destinations, especially the Chinese market, are impacting the tourism sector. These factors suggest that the number of international tourists in 2026 is projected to be lower than the pre-COVID level of around 40 million in 2019, reflecting a recovery that has not yet reached its full potential and the challenges posed by the changing post-COVID tourism market structure.

Private sector investment, while growing slowly, is expected to maintain momentum. Despite pressure from uncertain US import tariffs and slow domestic demand recovery, private sector investment shows some positive signs, particularly a potential recovery in confidence if a new government is formed quickly and continues to implement investment-supportive policies. This is especially true for projects approved by the BOI, which are projected to reach a record high value in 2025, driven by potential FDI inflows, especially in the digital, electric vehicle, and renewable energy industries. Combined with the BOI's Thailand FastPass mechanism, this is expected to accelerate the implementation of these promoted projects. Furthermore, the trend of manufacturing relocation from China to Southeast Asia continues. Thailand has the opportunity to benefit from strong infrastructure and supply chains. Therefore, private sector investment is likely to expand gradually in 2026.

The export sector is expected to slow down due to the full-year impact of the US import tariffs, although there may be some support from the upward cycle of the electronics sector. Exports previously received a temporary boost in 2025 from accelerated orders before the new import tariffs came into effect (front-loading), but in 2026, Thai goods exports will be affected throughout the year by the import tariff policy.

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