BANGKOK, THAILAND – The World Bank warned that Thailand was among the economies most exposed to the latest global energy shock, with rising oil prices threatening to push up inflation and production costs while slowing growth.
World Bank sees Thailand highly exposed to oil price shocks
In a new report, the World Bank said Thailand ranked among the economies most exposed to the recent global energy price shock. It attributed the turbulence mainly to geopolitical tensions in the Middle East, which had driven oil prices higher.
For countries heavily dependent on energy imports, the report said the shock posed a significant risk. Thailand was described as particularly vulnerable because oil imports accounted for around 5 to 13 percent of gross domestic product, according to the study.
Inflation impact and pressure on industrial output
The World Bank estimated that a rise in crude oil prices of 20 US dollars, roughly a 30 percent increase, could lift inflation in Thailand by about 0.67 percentage points within six months. That would place the country among those with the strongest inflation effects in East Asia and the Pacific.
Higher energy prices could also slow industrial production. Within the region, Thailand and the Philippines were expected to be among the most affected economies.
Slower East Asia-Pacific growth and weaker Thai outlook
For developing economies in East Asia and the Pacific, the report projected growth would cool from 5.0 percent in 2025 to 4.3 percent in 2026, before edging up to 4.4 percent in 2027. It cited China’s more moderate expansion and the impact of rising energy prices on the rest of the region as key reasons.
For Thailand, the World Bank forecast growth of 1.3 percent in 2026, down from its October projection of 1.8 percent and below the expected 2.4 percent for 2025. Growth was projected to recover modestly to 2.3 percent in 2027.
China’s slowdown and regional spillovers
China, the region’s largest economy, was expected to see its growth ease from 5.0 percent in 2025 to 4.3 percent in both 2026 and 2027. The report pointed to subdued domestic demand, persistent problems in the real estate sector and weakening external demand.
The World Bank also highlighted possible spillover effects from China and advanced economies. It said a one-percentage-point decline in China’s growth could reduce growth in the rest of the region by around 0.3 percentage points, while a slowdown in the G7 countries would also weigh noticeably on East Asia and the Pacific.
Consumption supports growth, but confidence remains fragile
Private consumption remained the main driver of growth in the region, according to the report. However, consumer confidence was still sensitive, with indicators at about 80 percent of their pre-pandemic levels.
The World Bank said this fragility reflected ongoing economic uncertainty. Rising energy prices could further squeeze household purchasing power as higher production and transport costs fed more quickly into consumer prices.
Exports and a strong rebound in Thai electronics
Exports had provided additional support, particularly in technology-related sectors. The World Bank reported that Thailand’s electronics exports rose by around 32 percent in 2025.
This expansion far outpaced the growth of non-electronics exports, which the report linked to rising global demand for AI-related components. At the same time, it warned that weaker overall global demand could again weigh on shipments from Thailand and its neighbors.
Investment lags behind pre-pandemic levels
Private investment in East Asia-Pacific developing economies remained below pre-pandemic levels. Companies were delaying spending because economic policy uncertainty at home and abroad had increased.
This hesitation further dampened momentum, even where consumption and exports provided temporary support. In an environment of rising energy prices, firms could become more cautious as costs and profit margins grew harder to predict.
US trade policy and new tariff risks for Thailand
The World Bank also pointed to risks stemming from US trade policy. It noted that tariffs imposed under emergency powers had been reduced after a US court ruling, but said they had been replaced by a temporary global import tariff of 10 percent due to remain in place until July 2026.
This change reduced the tariff advantage East Asian economies had enjoyed over China. Cambodia, Thailand and Vietnam were identified as particularly vulnerable to potential income losses from higher US tariffs.
Geopolitics, supply chains and higher input costs
Geopolitical tensions could disrupt supply chains and tighten financing conditions, the report warned. Rising prices for energy, fertilizer and food could further increase production costs across the region.
The World Bank stressed that a prolonged or escalating conflict in the Middle East, especially if it disrupted shipping routes or energy supplies, could put additional pressure on export-oriented economies such as Thailand. While global markets had so far remained relatively resilient, the associated risks had increased.
Limited fiscal room and pressure on Thailand’s trade balance
Thailand faced constraints in responding to external shocks because public debt was high and fiscal space remained limited, according to the World Bank. This could make it harder for the government to cushion sharp price or demand declines through public measures.
At the same time, higher energy prices were putting pressure on the trade balances of major oil importers. For Thailand, the report said, rising import costs could further strain the country’s external position.