BANGKOK, THAILAND – Thailand’s Parliamentary Budget Bureau warned of mounting economic risks from the US–Iran war, heavy energy dependence and new trade frictions with the United States, compounded by weak investment, falling productivity and rising fiscal pressure.
Parliamentary warning on Thailand’s exposure to external shocks
The Parliamentary Budget Bureau highlighted rising economic risks as Thailand faced the fallout from the US–Iran conflict. The office pointed to immediate vulnerabilities stemming from energy dependence and broader global instability.
The report also referred to failed talks in Islamabad on Saturday, which increased concern over a rapid resumption of hostilities. These developments were classified as a direct threat to Thailand’s economic stability.
The policy paper: “Thai Economic Situation and Fiscal Constraints”
The findings were released on 12 April 2026 in a formal policy paper titled “The Thai Economic Situation and Fiscal Constraints.” The document was prepared as background for the government’s policy statement to parliament.
It analyzed macroeconomic conditions, fiscal limits and structural risks, identifying key obstacles to long‑term growth. The paper served as a comprehensive briefing on the country’s current economic position.
Energy dependence: 51% of oil from the Middle East
As a central weakness, the Budget Bureau cited Thailand’s energy dependence, noting that 51% of oil imports came from the Middle East. Any disruption to supplies could quickly hit the economy, particularly if tensions escalated around the Strait of Hormuz.
In a disruption scenario, the report said inflation could rise to 4.5%, while gross domestic product might shrink by nearly 1%. Even short‑term instability would therefore have tangible consequences for prices and growth.
Export and services model: high reliance on global demand
Beyond energy, the paper underlined the strong dependence on external demand. Around 60% of GDP was generated by the services sector, while exports accounted for roughly 70% of GDP.
This structure left Thailand especially exposed to global volatility, including possible US import tariffs or geopolitical tensions that could hit demand and supply chains. Trade‑related uncertainty remained a major risk factor, according to the report.
US trade pressure: Thailand among the “Dirty 15”
In this context, Thailand was listed among the so‑called “Dirty 15,” a group of countries with large trade surpluses vis‑à‑vis the United States. This status increased the risk of being targeted by US tariff measures.
Such steps could directly damage export performance and further undermine already fragile planning certainty for businesses. The report viewed this as an additional burden on the country’s economic outlook.
Labour market and industry: productivity strain and factory closures
Domestically, the Budget Bureau diagnosed a structural labour market crisis. Around 12 million people worked in agriculture, where value added remained low, restraining productivity and hampering income gains.
At the same time, the industrial sector was contracting, and more than 2,300 factories had closed in recent years, according to the paper. As a result, overall labour productivity across the economy continued to decline.
Household debt and loans: risks despite rate cuts
Household debt remained high at 86.80% of GDP, even though the ratio had eased slightly. At the same time, non‑performing loans were rising in several credit categories.
Monetary easing showed only limited effect, the report noted. The Bank of Thailand had cut its policy rate to 1%, yet credit quality continued to deteriorate, potentially weighing on financial system stability.
Foreign direct investment: many applications, little real growth
On foreign direct investment, the paper reported weak real growth. While applications at the Board of Investment stayed high, actual investment growth amounted to only 1.40% of GDP.
The Budget Bureau interpreted this gap as a sign of cautious investor confidence. Capital inflows were not translating into expansion and productivity gains to the extent needed for stronger growth.
Public finances: narrow revenue base, growing deficit pressure
On the fiscal side, pressure was clearly increasing because state revenues rested on a narrow tax base. More than 64% of income came from three sources: value‑added tax, corporate income tax and personal income tax.
This structure made revenues highly sensitive to any economic slowdown, as tax receipts could quickly fall when growth weakened. Managing the budget deficit was therefore becoming more difficult.
Debt ratio nearing 70% legal ceiling
The State Enterprise Policy Office expected a significant shortfall, with revenues falling up to 240 billion baht below target, according to the report. At the same time, public debt was continuing to rise, and analysts warned of an approach toward the legal ceiling.
The limit stood at 70% of GDP under the State Fiscal and Financial Disciplines Act 2018, and the Budget Bureau anticipated reaching that level by 2028. Additional shocks, such as an energy crisis, could bring that date forward and tighten fiscal room more quickly.
Demographics: rapid ageing and a 70‑year low birth rate
As a long‑term pressure factor, the report also cited demographics, noting that Thailand was ageing rapidly and had recorded its lowest birth rate in 70 years. This trend was adding strain to the labour market and the sustainability of public systems.
With fewer working‑age people and rising old‑age burdens, reforms and productivity gains would become even more important to safeguard growth. The paper classified these demographic shifts as a structural challenge for the coming years.