Bangkok (VNA) – Thailand's GDP growth is likely to slow down to 1.6% in 2026 amid persistent economic headwinds though easing monetary policy will provide some support, said the International Monetary Fund (IMF).
According to an IMF statement following its 2025 Article IV Consultation mission to Thailand, conducted between October 30 and November 13, the Thai economy is projected to soften in the second half of 2025 and further in 2026. GDP growth is forecast at 2.1% in 2025 and 1.6% in 2026.
It said Thailand's economy is confronting mounting pressures. Long-standing structural issues and the lingering effects of the pandemic, including elevated household debt, have constrained growth for some time. These vulnerabilities are now being compounded by a new wave of shocks.
While the US cut its proposed tariffs on Thai exports to 19% from the initial level of 36%, uncertainty remains high. Foreign tourist arrivals have weakened and an unexpected change in government has added to the unease, expected to weigh on next year's outlook.
The IMF said tight financial conditions are likely to suppress demand. Inflation is expected to stay subdued, with headline inflation projected to average -0.1% in 2025 and 0.4% in 2026.
The global lender said the Bank of Thailand retains sufficient room to maintain an accommodative monetary policy to support the recovery. The policy rate is 1.5% following four cuts totalling 100 basis points since October 2024.
With risks skewed to the downside, the IMF emphasised the importance of close coordination between monetary and fiscal policies, while safeguarding central bank independence and maintaining exchange rate flexibility as a key shock absorber.
The fund noted a moderate fiscal expansion, supported by carryovers from the previous fiscal year, could provide important near-term support. Available fiscal resources should be directed towards growth-enhancing measures, remaining targeted with efficient implementation to maximise their impact, noted the IMF.
In this context, the mission welcomed the Thai Government's decision to redirect planned digital wallet cash transfers towards investment projects and to increase social assistance for state welfare cardholders.
The authorities' plans to continue promoting orderly household debt deleveraging and to support small and medium-sized enterprises are steps in the right direction, noted the IMF.
Priorities should include restructuring low-value unsecured personal loans and enabling borrowers to re-enter the formal credit system after successfully repaying reduced balances or instalment arrangements, added the IMF. The fund also recommends urgent structural reforms to bolster resilience and raise Thailand's long-term growth potential.
In addition, the IMF said policymakers should consider deepening trade and financial integration, advancing structural transformation to boost labour productivity, increasing export sophistication, and strengthening social protection, governance and climate resilience./.
