Thailand: Middle East shock tests growth – DBS

DBS Group Research economist Chua Han Teng has analyzed Thailand's recent macroeconomic data, revealing that the country's GDP growth decelerated to 1.9% year-on-year in the second quarter of 2026, down from 2.8% in the first quarter. This has led to an upward revision of the 2026 GDP growth forecast to 2.1%, attributed to a milder Middle East shock and the support provided by government policies.

The report also highlights that government consumption growth slowed during the quarter, but private consumption growth is expected to stabilize with the introduction of government stimulus measures from June 2026. Visitor arrivals have shown a rebound, but sustained momentum into the year-end peak season is crucial for the recovery.

Meanwhile, goods exports continue to perform well, supported by global artificial intelligence trends, and the investment upcycle remains robust. The Bank of Thailand is anticipated to maintain its policy rate at 1.00% for the rest of 2026, as the central bank seeks to bolster growth amidst low and uneven economic performance and expectations of easing inflation driven by falling energy prices.