BANGKOK, THAILAND – Business leaders and bankers in Thailand warned that 2026 was shaping up to be one of the most challenging economic years in decades, with growth expected to fall well below the country’s potential.
Weakest expansion in decades forecast
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) projected that Thailand risked posting its weakest growth in about 30 years outside classic crisis periods. The committee expected GDP to expand by around 1.5% in 2026 and only 2% in 2025, which would push the economy to the bottom of the regional growth league. It pointed to deep‑rooted structural problems that were holding back investment and productivity, saying Thailand was entering the new year facing both cyclical headwinds and long‑term risks.
Debt, aging and competitiveness strains
The JSCCIB highlighted familiar structural challenges: an aging and now shrinking population, while productivity stagnated across many sectors. At the same time, household debt remained high, constraining consumption and borrowing. The committee cited high household indebtedness and a large informal economy, weak competitiveness and fiscal limits, regulatory burdens and fragmented data systems, the legacy of past disasters and budget delays, and rising cybercrime and illegal capital flows as key risk factors.
Baht surge adds pressure on exporters
An additional concern was the sharp appreciation of the baht against the US dollar. The currency had gained 8.2% over the previous year, making it the region’s second‑strongest performer. According to the JSCCIB, this acted like an extra tariff on exports and squeezed exporters’ margins.
Warnings on currency risks and geopolitics
Committee chairman Poj Aramwattananon urged regulators to step up vigilance over exchange‑rate movements.
“I would like the responsible regulatory authorities to monitor the development of exchange rates, which are appreciating in line with gold prices, as well as the role of digital asset trading in Thailand in relation to the baht.”
said Poj Aramwattananon, JSCCIB chairman.
The body saw the global economy weighed down by intensifying geopolitical tensions and polarization. It anticipated a slowdown in worldwide growth and warned that US tariffs were likely to hit Thai exports harder, noting that shipments excluding electronics were already contracting.
Tourism setback and export risks
Thailand’s traditionally strong tourism sector had lost significant momentum. The number of foreign visitors fell by 7.23% in the previous year, compared with an expected increase of about 10%, removing one of the country’s key growth pillars. At the same time, the economy remained vulnerable to shifts in global trade, with an earlier boost from front‑loaded orders by US importers having faded.
Trade tensions and regional uncertainty
Higher US tariffs and political frictions in the region, including concerns about possible tensions along the border with Cambodia, were adding to uncertainty. A trade agreement with the United States remained unresolved, leaving exporters exposed to further policy shocks and market volatility.
Banks brace for fragile environment
The strained backdrop was mirrored in the financial system. Household debt stood at 86.8% of GDP in the second quarter of 2025, and bankers warned this level was severely limiting many borrowers’ creditworthiness and would likely make 2026 another difficult year. Kris Chantanotoke, chief executive of Siam Commercial Bank (SCB), expected growth of just 1.5% in 2026, in line with the central bank’s forecast.
“This pace reflects growth below potential and increased economic fragility. 2026 will therefore be another challenging year.”
said Kris Chantanotoke, chief executive of Siam Commercial Bank.
He saw risks both externally and domestically, ranging from trade conflicts and weaker global demand to heavy debt burdens and political uncertainty.
Fear of a psychological downward spiral
Kris also cautioned against a deterioration in sentiment.
“The most dangerous risk may not be the fundamentals themselves, but a climate of fear that could trigger a self‑fulfilling prophecy.”
said Kris Chantanotoke, chief executive of Siam Commercial Bank.
Despite the headwinds, SCB planned targeted loan growth in corporate lending, mortgages and auto loans, while seeking to contain non‑performing loans and support government debt relief programmes. Chartsiri Sophonpanich, president of Bangkok Bank, likewise expected growth below 2% and said the bank would focus on helping customers adjust to the weak environment.
“Under this scenario, the bank must operate at full capacity to help customers adapt to a changing environment.”
said Chartsiri Sophonpanich, president of Bangkok Bank.
He stressed that banks needed to provide broader support beyond traditional lending.
Rate cuts and subdued inflation
The Bank of Thailand had lowered its policy rate, and commercial banks followed with reduced lending rates. Inflation remained very subdued, with headline inflation at minus 0.28% in December and core inflation at 0.59%. Even so, the central bank pointed to ongoing challenges from eroding competitiveness and weaker exports stemming from US tariffs.
Vietnam’s rise intensifies competitive pressure
Additional strain was coming from the rise of Vietnam. Somphop Manarangsarn, president of the Panyapiwat Institute of Management, warned that Thailand risked losing its status as Southeast Asia’s second‑largest economy.
“Vietnam is using a similar, industry‑driven development model, but with lower costs and stronger demographic fundamentals.”
said Somphop Manarangsarn, president of the Panyapiwat Institute of Management.
Vietnam, with more than 101 million inhabitants, had a larger and younger population, while Thailand’s 66 to 71 million people formed a more urbanised but aging society. Experts therefore saw Vietnam in a stronger position for long‑term growth and investment, and Somphop argued that Thailand could no longer rely on its old development model.
Service sector seen as new growth engine
Somphop identified opportunities in services.
“Thailand has strong capabilities in healthcare, food, entertainment, tourism and retail.”
said Somphop Manarangsarn, president of the Panyapiwat Institute of Management.
He said services could become a central growth engine that remained linked to industry and agriculture, offering a potential path out of stagnation if supported by the right policies and investments.
Calls for reform and policy shifts
Despite the risks, the JSCCIB backed government efforts to tackle debt problems and overhaul the economic structure. It urged stronger integration of the informal economy into the formal financial system and the removal of barriers to investment. The committee added that tougher measures against corruption and illegal activities would boost confidence and reduce hidden business costs.
Thailand at a turning point
Business figures and analysts viewed 2026 as a turning point for Thailand’s economy. Without faster reforms, they warned of continued underperformance, while decisive adjustments could stabilise competitiveness and restore momentum. They concluded that the country was entering one of the most difficult economic years in recent history with weak growth, rising risks and rapid advances from key regional competitors.