Risks to Thailand’s Economy Rise Due to War in the Middle East
Bangkok Post
The Bank of Thailand has warned of rising risks to the country’s economy due to the war in the Middle East and a deteriorating growth outlook. Stabilising the situation will require coordinated economic policy measures and structural reforms, according to the regulator’s meeting minutes.
Interest Rate Held and Consumer Stimulus
At its April 29 meeting, the Bank of Thailand’s Monetary Policy Committee (MPC) unanimously decided to keep the one-day repurchase rate at 1%. The regulator chose not to adjust policy settings, assessing the impact of rising oil prices driven by the Middle East conflict.
The published minutes note that the economy requires a “coordinated policy mix” and structural reforms. Committee members said heightened external risks call for caution, while short-term demand stimulus cannot address fundamental issues.
The Bank of Thailand also stated that consumption stimulus provides only temporary effects. The focus should instead be on structural economic transformation and preserving fiscal space, rather than large-scale spending programmes. The regulator also expects credit growth in 2026 to remain subdued.
The impact of the Middle East conflict has already extended beyond higher energy prices. Broader consequences include weaker purchasing power and rising business costs.
Thailand’s Credit Packages
The Thai government has approved a 400-billion-baht ($12.4 billion) credit package, along with a consumer subsidy programme scheduled for launch in June. Deputy Finance Minister Ekniti Nitithanprapas said the borrowing aims to provide short-term economic support while also strengthening long-term structural resilience and the energy sector. He noted that available fiscal resources were carefully assessed, and the need for emergency borrowing was justified by current conditions.
Deputy Prime Minister Pakorn Nilprapant said the key legal criterion for the measure is linked to national economic security. This principle, he argued, determines the legal basis for the borrowing mechanism and underpins its implementation.
Authorities also said they plan to submit an additional borrowing proposal of 200 billion baht to the Cabinet to support domestic consumption.
Revised Economic Growth Outlook for Thailand
Thailand’s economy, the second largest in Southeast Asia, has recovered more slowly than several regional peers since the COVID-19 pandemic. GDP grew by 2.4% in 2025.
Bank of Thailand Governor Vitai Ratanakorn revised economic forecasts. Inflation projections were raised from 2.9% to 3.1% for 2026 and lowered from 1.5% to 1.4% for 2027. The central bank’s target range is 1% to 3%.
GDP growth expectations were also adjusted, from 1.5% to 2.1% for 2026 and from 2% to 1.6% for 2027. The upward revision for the current year reflects upcoming borrowing measures aimed at supporting the economy.
On May 13, the finance minister said he expects Thailand’s economy to grow by more than 3% over the next couple of years, driven by new investments. He noted that investment rose 18% year-on-year in the first quarter to 260 billion baht ($8.05 billion), while applications for investment totalled 1 trillion baht over the same period.
Conclusion
Analysts at International Investment note that the Middle East conflict is having a significant impact on Thailand’s economy. Energy prices have risen, purchasing power has weakened, and business costs have increased. Negative effects are also being observed across other sectors of the economy.
In this environment, the Bank of Thailand maintains a cautious monetary policy stance, while the government focuses on a combination of borrowing and investment measures. The key challenge is to sustain economic growth amid external shocks and limited fiscal space.