BANGKOK, Thailand – Consumer confidence has plummeted to a four-year low, fueled by rising prices and geopolitical instability.
Consumer Confidence at Tiefststand since December 2022
The consumer confidence index compiled by the University of the Thai Chamber of Commerce (UTCC) fell to 49.5 points in May, marking the weakest performance since December 2022. Analysts at the UTCC Center for Economic and Business Forecasting identified the Middle East conflict and soaring oil prices as primary concerns. These factors are identified as significant brakes on economic growth and contributors to increased living costs.
The overall economic confidence index dropped from 44.1 to 43.1 points. Confidence in employment saw a decrease from 48.6 to 47.5, and income expectations weakened from 59.0 to 57.9. All these figures remain well below the neutral threshold of 100, indicating persistent uncertainty.
2.89 Percent Inflation – Households Feel the Pressure
Inflation reached 2.89 percent in April, driven substantially by escalating energy costs stemming from the Middle East crisis. Thai households are reportedly grappling with rising expenses and a diminishing purchasing power. Banks have tightened lending practices in response to the increasing economic uncertainty.
The government has responded by expanding its borrowing to finance the “Thai Helps Thai Plus” stimulus package. Approximately 170 billion Baht is allocated to bolster domestic demand through September. This program, which commenced on June 1, aims to invigorate private consumption.
Tourism Brings in 108 Billion Baht
In May, 2.35 million foreign tourists visited Thailand, representing a 3.54 percent increase compared to the same month last year. Tourist spending saw an even more significant rise, with 108 billion Baht collected, a jump of 12.77 percent. A spokesperson described this as a positive development.
Malaysia remained the leading source of tourists, followed by China, India, Russia, and Singapore. From January 1 to June 7, the total number of visitors reached 14,515,978, generating revenues of approximately 701.36 billion Baht. China leads in arrivals with 2.38 million, with Malaysia second at 1.83 million and India third with 1.10 million.
Exports Surprise – AI Boom Propels Technology Exports
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) raised its growth forecast on June 10. Instead of stagnation, the economic associations now anticipate GDP growth of between 1.6 and 2.0 percent. The president of the Thai Bankers’ Association cited strong exports and government stimulus measures as reasons for this revised outlook.
Exports are projected to grow by eight to ten percent in 2026. Technology products are a key driver, with goods exports increasing by 18.9 percent in the first four months, and high-tech goods exports surging by 48.4 percent. Global investments in AI and data centers are fueling this boom across other Asian nations.
K-Shaped Recovery – Winners and Losers
The JSCCIB, however, expressed concern regarding a significant economic division.
“We are concerned about the pressure on the lower tier of the K, which is not benefiting from increased exports and foreign direct investment.”
said the committee. Data from over 300 listed companies indicate rising costs and declining revenues for some sectors. Urgent restructuring is proposed to leverage export-oriented industries as a “catalyst” for job creation and increased domestic value addition.
Traditional industries are struggling with expensive raw materials and weak demand, while data centers, despite consuming resources, create limited employment opportunities. Domestic demand is expected to remain subdued until the stimulus measures fully take effect. Moreover, many technology exports rely on imported components, limiting the benefits for local suppliers.
Outlook Towards Autumn
Consumers are delaying spending as long as the Middle East conflict remains unresolved. The UTCC anticipates subdued sentiment in the first half of the year, with many awaiting lower energy costs and the success of government programs. May and June will be crucial months for economists to gauge whether stimulus packages can restore confidence. Thailand enters the second half of 2026 with conflicting economic signals. Inflation, debt burdens, uncertainty, and rising costs are pressuring households and many businesses. Concurrently, record tourism revenue, an export boom, and substantial government aid are cushioning the situation. The coming months will reveal if these supports are sufficient or if pressure from the Middle East will prevail.