In the first quarter of 2026, Thailand’s economy expanded by 2.8 percent, beating analyst expectations. But the economic outlook for the full year remains modest, with the National Economic and Social Development Council (NESDC) forecasting between 1.5 and 2.5 percent growth. The World Bank is more cautious, forecasting 1.6 percent growth in 2026. Thailand has been stuck in a low-growth equilibrium since the pandemic, as its heavily export-dependent economy has been battered by trade wars, geopolitical turmoil, and unstable domestic politics.
The economy grew 2.9 percent in 2024 and then 2.4 percent in 2025. The NESDC’s midpoint forecast for 2026 is 2 percent, so the economic momentum is not trending in the right direction. Meanwhile, regional peers like Indonesia, Malaysia, the Philippines, and Singapore have seen robust GDP growth rates of between 4 and 5 percent. Vietnam, growing at a blistering 8 percent, recently overtook Thailand as Southeast Asia’s export powerhouse.
This is important because Thailand’s economy is built around exports. It has historically been a major exporter of agricultural products such as rice, as well as manufactured goods like cars and electronics. It has also consistently been a leading exporter of services anchored by an enormous tourism sector. A decade ago, when Vietnam’s economy was smaller and the global economy was different, that model worked. These days, maybe less so.
In 2017, Thailand ran a surplus in its current account of almost $44 billion, with a trade surplus of $32.6 billion. The pandemic caused the current account to go negative, and the road to recovery has been long and slow. In the last few years, Thailand has returned to current account surpluses ($16 billion in 2025), but it has not been sufficient to get the economy back on its pre-pandemic trajectory.
It is proving increasingly challenging for Thailand to export its way out of this economic malaise. This is because export-led growth requires foreign markets to absorb excess production, something that was a more reliable model of economic growth in the past than it is today. Nevertheless, Thailand’s exports reached $95 billion in the first quarter of 2026, seemingly a step in the right direction.
But with global energy prices rising sharply, imports were also up, coming in at $95.4 billion, meaning Thailand actually ran a small deficit in its balance of trade for the first time in 14 quarters. In a world where global trade is becoming more unpredictable and weaponized, exporting your way back to strong growth is simply going to be a tricky proposition.
There are some indications that Thailand is belatedly reconciling itself to this reality. One of the major factors holding back growth is high levels of public and consumer debt. Public debt is currently at 66 percent of GDP, which is on the high side for an emerging market. Thailand keeps a massive amount of foreign exchange reserves at the central bank, so the risk of default or financial crisis is low.
What high debt levels do in this case is constrain the government’s ability to stimulate the economy through additional spending and investment when it needs to. The government is already pushing the limit of its fiscal policy space, and just recently approved a decree authorizing $12 billion in emergency borrowing to offset rising energy costs.
Another issue is that Thai households suffer from structurally high levels of debt. Household debt was equal to 86 percent of GDP in the second quarter of 2025, which is high. When households have this much debt, it makes it harder for consumption to drive growth because income that would otherwise be spent on goods and services is used to pay back creditors.
This is why many analysts thought the digital wallet scheme, where Thai citizens received a cash payment, was ill-conceived, especially with the government already running out of fiscal space. In Thailand’s case, a one-time cash stimulus is going to be less effective than long-term debt restructuring and relief. It seems policymakers are finally coming to terms with this, with the Cabinet moving forward recently on a debt restructuring and relief plan that will cover around 2 million small-scale borrowers.
We are also seeing the government take a tougher line on inbound tourism and foreign ownership of assets. The Cabinet recently voted to reduce visa-free stays for tourists from most countries from 60 to 30 days as it pursues higher-value visitors who spend more on shorter trips.
It has also been reported that officials are scrutinizing foreign ownership of land and businesses. For a country where exports, tourism, and foreign investment have been key drivers of economic activity, this could backfire. But it signals that the government is looking to ensure more of the value created in Thailand actually stays in Thailand.
Thailand has faced a steeper road to recovery in recent years than many of its regional peers. If exports can no longer be relied on to drive growth, the economy must pivot toward investment and consumption. To do that, high levels of household debt need to fall and incomes need to rise. And while it seems that policy is starting to move in that direction, the government is running out of fiscal policy space and will have to be very judicious in how it supports these efforts.
