The Economic Intelligence Center of Siam Commercial Bank, or SCB EIC, has revised up its forecast for Thailand's economy in 2026 to 2.2% growth from a previous estimate of 2%, and expects expansion of 2.1% in 2027, up from 1.9%, supported by exports, investment, and government budget disbursements. Dr. Yanyong Thaicharoen, Chief Executive Officer of the Economic Research and Sustainability Division at SCB EIC, said Thailand's economy is being driven by exports of electronic goods and foreign direct investment in the digital and technology sectors, in line with the global AI cycle. However, he said the recovery is K-shaped, uneven and concentrated in certain industries, with total investment as a share of GDP at just 22%, while the number of zombie companies whose profits are insufficient to cover interest and debt obligations has risen to 12%. Dr. Thitima Chucherd, Senior Director and Head of Macroeconomic Research at SCB EIC, said the US Federal Reserve is expected to raise its policy rate at this meeting, but this will not affect Thailand's policy rate, which is likely to remain at 1% through 2027, because Thailand's challenges differ from those of the United States. Thailand needs low interest rates to support the economy, alongside targeted measures to help those with troubled loans and to address debt problems. Three key risk factors bear watching. First, the Middle East war has pushed crude oil prices up to nearly 110 dollars per barrel and driven the Oil Fuel Fund deficit to nearly 90 billion baht. Second, the trade war, with the United States likely to raise tariffs on 16 countries, including Thailand, over allegations of overcapacity. Third, the risk from El Nino, which is expected to cut GDP by about 0.2% to 0.4% over two years. Meanwhile, if the new Power Development Plan is carried out over the next 10 years, it could generate as much as 1.4 trillion baht in private investment.
SCB X Public Company LimitedSCB EIC forecasts Thailand GDP growth and expects the Fed to hike while Thailand's policy rate stays at 1%, a macro/rate view from the bank's research arm.
