Thailand raises growth outlook in boost to new government
GDP in the three months through December rises 2.5% from a year earlier
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[BANGKOK] Thailand upgraded its growth projections for 2026 as the new government counts on a resurgence in exports and tourism to sustain momentum from a better-than-expected performance last quarter.
Gross domestic product (GDP) in the three months through December rose 2.5 per cent from a year earlier, the National Economic and Social Development Council (NESDC) said on Monday (Feb 16). That exceeded the highest estimate of 1.9 per cent in a Bloomberg News survey and the 1.2 per cent pace recorded in the third quarter.
On a quarter-on-quarter basis, the economy expanded 1.9 per cent, marking the largest jump in four years to beat the forecast of 0.6 per cent growth.
Full-year growth stood at 2.4 per cent, prompting the NESDC to raise its outlook for 2026 economic growth to between 1.5 per cent and 2.5 per cent, from the 1.2 per cent to 2.2 per cent projected earlier.
The benchmark SET Index rose as much as 1.2 per cent to 1,447.68, then pared gains. The Thai baht edged 0.2 per cent higher to 31.015 per US dollar, in line with most emerging-market peers. The move may have been tempered by thin liquidity, with most major Asian centres, including China, closed for the Chinese New Year holiday.
The latest GDP data should boost Prime Minister Anutin Charnvirakul, whose party secured a stronger-than-expected election result and sealed a coalition deal last week. Anutin has pledged to focus on the economy and cost-of-living pressures, including measures to support households and employment.
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The NESDC said that easing trade restrictions should lift goods exports this year, while a recovery in tourism would support services exports. Total goods and services exports are projected to expand 2.1 per cent, slowing from 9.2 per cent in 2025 but up from a previous forecast of 1.1 per cent.
Meanwhile, private consumption should continue firming due to low inflation and loose monetary policy, the NESDC noted. Headline inflation, which has been negative for the past 10 months, is expected to average between -0.3 per cent to 0.7 per cent in 2026.
The Bank of Thailand (BOT) in December cut the benchmark interest rate for the fifth time since October 2024, to 1.25 per cent, to support the fragile economy. Policymakers will convene again on Feb 25 for their first meeting of the year. Economists in a Bloomberg survey expect the BOT to cut the key rate this quarter and then pause.
Two decades of political instability have turned Thailand from an aspiring economy to a regional laggard beset with stagnant growth, soaring debt, widening inequality and a shrinking workforce. Its annual growth rate of about 2 per cent a year is less than half the pace of Malaysia and Singapore and barely a quarter of the growth in Vietnam.
However, Thailand saw an uptick last quarter as the government’s stimulus helped spur consumption and investment, NESDC chief Danucha Pichayanan told a news briefing on Monday. The run-up to the vote this month also increased spending, he added.
Investment grew 8.1 per cent in the fourth quarter, up from 1.4 per cent in the third quarter. Household consumption expanded 3.3 per cent, while government consumption rebounded from a contraction in Q3 to grow 1.3 per cent from October to December.
Thailand now joins the regional wave of upside growth surprises, according to OCBC. Neighbours Singapore and Malaysia also performed better than expected in 2025, shaking off the impact of higher US tariffs as the boom in artificial intelligence (AI) boosted demand for their electronics.
The Thai economy is emerging from its slump, Finance Minister Ekniti Nitithanprapas told reporters on Monday. The quick formation of the government and the steady rollout of investment should help lift GDP to at least 2 per cent this year, he said. The government’s “high target” is growth above 3 per cent, he added.
NESDC chief Danucha said that political uncertainty after the election that disrupts preparations for the fiscal year beginning Oct 1 would pose a risk. “If the government can come into office by early April, the Budget next year may be slightly delayed by two months. If it takes a longer time than that, it will lead to further delays and that will affect the economy,” Danucha added.
Capital Economics was less optimistic, saying the economy faces cyclical and structural challenges, including limited fiscal space and high household debt. The country also produces relatively few goods tied to the global AI upswing.
“Overall, despite a quarter of broad-based strength, we expect growth to soften again,” economist Shivaan Tandon said in a note, adding Thailand is expected to remain “a regional underperformer” this year. BLOOMBERG
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