BoT upgrades GDP growth forecast

BoT upgrades GDP growth forecast Small Medium Large Business General BoT upgrades GDP growth forecast Figure raised to 2.3% from previous 1.5% PUBLISHED : 25 Jun 2026 at 05:17 NEWSPAPER SECTION: Business WRITER: Somruedi Banchongduang and Nareerat Wiriyapong Small Medium Large Robust exports, government stimulus and easing tensions in the Middle East could lift Thai GDP growth to 2.

3% this year, beating the previous projection of 1.5%, says the Bank of Thailand. The Bank of Thailand has upgraded its GDP growth forecast for 2026 to 2.

3% from 1.5%, attributed to strong exports, government stimulus and easing geopolitical tensions in the Middle East.The moves comes as the central bank's Monetary Policy Committee (MPC) on Wednesday voted unanimously to maintain the policy rate at 1%, as the market expected.

The committee slashed the GDP growth forecast for 2027 to 1.8% from 2% due to the base effect, said MPC secretary Don Nakornthab. "Thailand's economic expansion is projected to be stronger than previously assessed, but growth remains low and uneven," Mr Don told a briefing.

Growth was supported by merchandise exports and private investment associated with the technology and artificial intelligence cycle, he said. According to the central bank, government measures to alleviate the impact of the energy crisis and an improvement in the Middle East war would also support Thai economic expansion this year. The impact of the conflict on the manufacturing and tourism sectors has been less severe than previously anticipated, with large businesses demonstrating greater adaptability than anticipated, noted the regulator.

"The Dubai crude oil price has dropped below the central bank's average of US$100 for the year, while businesses have identified new sources of raw materials and adjusted their transport routes," said Mr Don. However, small and medium-sized enterprises continue to face limitations in adaptation and are constrained by intense competition. Most households are pressured by decelerating income growth and rising living costs, which will weigh on private consumption once government relief measures phase out, noted the central bank.

Inflation is expected to rise due to supply-side factors, but will subsequently fall once these pressures gradually ease, he said. Headline inflation in 2026 and 2027 remains in line with the previous assessment, averaging 2.8% and 1.

4%, respectively. Mr Don said headline inflation is expected to peak at 4.5% in the fourth quarter of this year, attributed to energy prices and El Niño effects.

However, consumer prices would not rise 5% for the year, as the central bank earlier estimated. For the remainder of 2026, inflation could exceed the target range of 1-3% due to the pass-through of energy and production costs, before declining in 2027 given the dissipation of supply-side pressures and the effect of a high base in 2026. While inflation has increased due to supply-side factors, the MPC will continue to monitor its outlook and associated risks going forward, he said.

NO NEED FOR A HIKE Nuttaporn Triratanasirikul, deputy managing director of Kasikorn Research Center (K-Research), said the market widely expected the central bank would keep the rate unchanged at this month's meeting, as elevated inflation seems to be temporary. The think tank anticipates the Thai policy rate will stay at 1% throughout the year. "Oil prices have decreased, particularly West Texas Intermediate crude to less than $74 per barrel, easing concerns about inflationary pressure in the Thai economy," she said.

In addition, stimulus programmes have been introduced to prop up the subdued economy. "Clearly, there will be no more rate cuts, but an increase seems unnecessary for now with oil prices dipping," Ms Nuttaporn told the Bangkok Post. "A hike could exacerbate the fragile Thai economy."

According to K-Research, government stimulus through the emergency borrowing of 400 billion baht could lift the economy by 0.3-0.6 percentage points.

The centre projects Thai GDP growth of 2% this year thanks to the 2.8% year-on-year uptick in the first quarter. HOLD FOR LONGER Pundits anticipate the policy rate could be maintained at 1% for at least one year to support the economic recovery, resulting in a prolonged interest rate differential between the US and Thailand and contributing to further short-term weakness of the baht.

The baht plunged to test the new 13-month low of 33.40 to the greenback. The Thai currency has depreciated 5.

5% this year. The CME FedWatch Tool prices in two rate hikes this year, while Bank of America predicts the Federal Reserve could enact up to three increases, delaying rate cuts for another two years. "If US rates stay higher for longer or rise while Thai rates remain on hold, the widening US-Thailand yield gap could drive capital outflows from Thailand towards higher and safer US yields, putting depreciation pressure on the baht," said Therdsak Thaveeteeratham, executive vice-president of