The Bank of Thailand has revealed that the overall Thai economy in the second quarter of 2026 showed clear signs of slowing compared to the previous quarter. The main reasons stemmed from rising energy prices and travel restrictions caused by ongoing unrest in the Middle East.
These factors notably reduced the number of foreign tourists and tourism revenues, especially among short-haul and European markets. As a result, service-related sectors—particularly hotels and restaurants—also experienced a contraction.
Private sector consumption and industrial production declined during the second quarter, despite government stimulus measures implemented late in the quarter. Industrial output fell across multiple segments, particularly petroleum production, which faced disruptions due to partial refinery maintenance shutdowns, as well as non-electric vehicle automotive manufacturing.
Nevertheless, the Thai economy continued to benefit from the global electronics upcycle and increasing investments in data centers. This supported ongoing growth in private investment and exports in technology-related goods compared to the previous quarter.
Import values also rose sharply, largely due to increased imports of crude oil for domestic reserves and electronic components. Meanwhile, government spending improved year-on-year, supported by higher current and capital expenditures from the central government.
In terms of economic stability, headline inflation in June 2026 stood at 2.42% year-on-year, decreasing from the previous month in line with global energy prices. Core inflation was 1.23%, up from the previous year, reflecting the gradual pass-through of costs among operators in personal items and processed foods segment. Thailand’s current account deficit narrowed to $3.5 billion in June, yet key risks continue to require close monitoring for the year as a whole.
Key factors to watch in the coming periods include: 1) developments in ongoing war and U.S. trade policy; 2) the recovery of the tourism sector; 3) the impact of rising living costs and business expenses on households and enterprises; 4) the effects of government stimulus measures; and 5) the El Niño phenomena.
