Thailand’s economic growth lowest among major Southeast Asian peers

Thailand's economic growth in the three months ending June was the weakest among major Southeast Asian economies, according to the National Economic and Social Development Council. GDP increased by 1.9% from a year earlier, falling short of the 2.8% expansion rate seen in the first quarter. Vietnam led regional growth at 8.39%, closely followed by Singapore at 5.9%, Malaysia at 5.8%, Indonesia at 5.29%, and the Philippines at 2.3%. Thailand, lagging behind, reported a growth rate of 1.9% during the period.

This sluggish growth was attributed to emergency borrowing of 400 billion baht by Prime Minister Anutin Charnvirakul's government to fund cash handouts and energy-transition projects. The country's heavy reliance on oil and gas imports from the Middle East exposed it to supply disruptions caused by the ongoing Iran war. Meanwhile, domestic demand and tourism, which typically contribute significantly to Thai GDP, remained subdued due to higher energy costs, which dampened household spending and business activity.

Looking ahead, the National Economic and Social Development Council forecasts the Thai economy to grow by 2% to 2.5% in 2026. The Bank of Thailand, which maintained its policy rate at a near four-year low in June, stated that the economy likely hit its bottom in the second quarter and is expected to recover in the third quarter.

This optimism is based on the easing of tensions in the Middle East and the rollout of government stimulus measures. Southeast Asian economies have varying growth targets for the year, with Vietnam aiming for a robust 10%, Singapore forecasting 4.5%-5.5%, Malaysia at 5.8%, Indonesia at 5.29%, and the Philippines at 2.3%.