Thailand growth beats forecasts, but officials keep cautious outlook

Thailand’s economy expanded 2.8% in the January-March quarter from a year earlier, outpacing the 2.2% median forecast and giving policymakers a stronger-than-expected start to 2026. But the better headline was not enough to change the full-year story. The National Economic and Social Development Council left its 2026 growth range unchanged at 1.5% to 2.5%, reflecting a view that the quarter’s strength will not fully offset mounting external risks.

The Bank of Thailand said first-quarter growth was supported by both demand and supply-side factors and benefited from conditions that were still favorable before the Middle East conflict escalated. Merchandise exports and manufacturing production continued to rise, and government expenditure also helped support activity. Even so, the central bank’s forecast summary as of 29 April still pointed to just 1.5% growth in 2026 and 2.0% in 2027, showing how cautious official institutions had become before the latest GDP release.

That caution centers on Thailand’s exposure to shocks beyond its borders. As Southeast Asia’s second-largest economy, Thailand relies heavily on tourism, exports and imported energy, leaving it vulnerable when conflict disrupts travel, trade and fuel markets. The Bank of Thailand said early signs of spillover were already visible: tourist arrivals from the Middle East and Europe fell sharply, exports to those regions contracted, and fuel imports increased as firms rushed to secure alternative suppliers. The central bank also warned that private consumption was under pressure from a higher cost of living and a weakening income outlook, while a prolonged war and supply disruptions could damage manufacturing and employment.

The government has moved to cushion the impact. Thailand approved a US$12.2 billion emergency borrowing package on 5 May, a roughly 400 billion baht plan to be deployed from June to September. The borrowing is meant to boost domestic spending, support more than 20 million low-income people under the Thais Helps Thais scheme and fund alternative energy. That came after the Ministry of Finance cut its 2026 growth forecast to 1.6% from 2.0% on 28 April, lowered its foreign tourist arrivals outlook to 33.5 million from 35.5 million and raised its inflation forecast to 3.0% from 0.3%.

Thailand grew 2.4% in 2025 after 2.9% growth in 2024, but the latest numbers show an economy that is still resilient in the near term and exposed in the longer run. The quarter beat is real; the warning from Bangkok is that it may not be durable.