Kiatnakin Phatra Securities (KKPS) has revised its 2026 GDP growth outlook for Thailand upward from 1.9% to 2.1%, driven by softer global oil prices following a de-escalation of Middle East tensions and increased momentum in regional AI investments. The main catalyst for this upgrade is an improved tourism forecast, though the securities firm noted that the overall boost to economic growth remains modest.
Tourism stands to gain most directly from the drop in oil prices. KKPS now expects foreign tourist arrivals to reach 32.7 million in 2026, up from 31.8 million previously projected, though this still represents a 0.8% year-on-year decline.
For 2027, arrivals are anticipated at 34.9 million. The recovery is expected to be strongest from long-haul markets, with a notable rebound in European tourists during the fourth quarter of 2026. Tourism revenue is forecasted to grow by 1.4% in 2026, a significant turnaround from a previously expected 1.5% decline.
The easing of oil prices is also expected to give Thai households some respite; however, the brokerage house cautions that weak household finances and slowing credit growth will likely limit any surge in domestic consumption. Instead, the primary effect may be alleviating financial pressures, with some gains potentially offset by the Oil Fuel Fund’s actions limiting reductions in retail fuel prices.
A reduced energy import bill is set to improve the current account outlook slightly, but KKPS still forecasts a small deficit in 2026. Factors such as weaker services balances, high import content within investment-related capital expenditure, and continued competitive challenges in exports are expected to limit further improvement.
KKPS now projects headline inflation to average 2.4% in 2026, down from a previous estimate of 3.0%. Inflation is expected to peak in the last quarter of 2026 before declining in 2027, while core inflation remains subdued due to ongoing weak demand.
The analyst firm anticipates that the Monetary Policy Committee will maintain policy rates throughout 2026, and only consider rate cuts if global yield pressures subside—something more likely to occur in 2027. Persistent current account issues and interest rate differentials may also continue to weigh on the Thai baht.
