var textForPages =["","","JUNE 2026 Project Editor: Ranjana Wangvipula; Coordinator: Srisamorn Phoosuphanusorn; Copy Sub Editor: Eric John Baker;\u000d\u000aCopy Editing: Frank Stephen Thompson, Alistair Ingamells, Andrew John Foxwell; Writers: Business reporters;\u000d\u000aPhotographs & Graphics: Bangkok Post archive\u000d\u000aCREATIVE & SPECIAL PUBLICATIONS:\u000d\u000aDeputy Managing Editor: Ratch Lunchaprasit; Design & Layout: Cheerawath Kruasukhon; Cover Design: Arthit Kannikar\u000d\u000aSPECIAL PUBLICATION ADVERTISING:\u000d\u000aSenior First Vice President: Nanthana Singkamala, Tel +66 (0) 2616 4440, Fax: +66 (0) 2240 3649, Email: nanthanas@bangkokpost.co.th\u000d\u000aThe Bangkok Post is edited by Soonruth Bunyamanee for the Bangkok Post Public Company Limited, Printer, Publisher and Owner.\u000d\u000aOffice: Bangkok Post Building, 136 Sunthorn Kosa Road, Klongtoey, Bangkok 10110, Thailand. Tel +66 (0) 2616 4000, www.bangkokpost.co.th\u000d\u000aCONTENTS\u000d\u000aMID-YEAR\u000d\u000aECONOMIC\u000d\u000aREVIEW\u000d\u000a6 MACROECONOMY\u000d\u000a Fiscal, external risks cloud Thai outlook\u000d\u000a8 INDUSTRY\u000d\u000a Industry eager for alternatives\u000d\u000a11 ENERGY\u000d\u000a Poised on a knife\u2019s edge\u000d\u000a13 INFRASTRUCTURE\u000d\u000a Last chance for reboot\u000d\u000a14 TELECOMMUNICATIONS\u000d\u000a Telecom maintains steady course\u000d\u000a16 PROPERTY\u000d\u000a War scuppers property hopes for 2026\u000d\u000a18 BANKING\u000d\u000a Banks prepare for challenges\u000d\u000a20 INSURANCE\u000d\u000a Insurance outlook glum\u000d\u000agiven war backdrop\u000d\u000a23 STOCKS\u000d\u000a Battered markets hope for calmer H2\u000d\u000a26 TOURISM\u000d\u000a Tourism hopes shattered by conflict\u000d\u000a28 IT\u000d\u000a Data centres, AI key to\u000d\u000aThailand\u2019s next growth phase\u000d\u000a30 RETAIL & RESTAURANT\u000d\u000a Retail, dining hit by\u000d\u000acost and demand squeeze\u000d\u000a6\u000d\u000a8\u000d\u000a23\u000d\u000a13\u000d\u000a20\u000d\u000a30\u000d\u000a16\u000d\u000aMID-YEAR ECONOMIC REVIEW 2026 3","For years, Hong Kong cemented \u000d\u000aits position as a global financial \u000d\u000acentre thanks to a simple, \u000d\u000alow-tax regime, its special connection with the Chinese mainland \u2014 \u000d\u000athe world\u2019s second-largest economy \u2014 \u000d\u000aand a sizeable and growing capital \u000d\u000amarket.\u000d\u000aWith the prolonged Middle East conflict creating uncertainty and volatility \u000d\u000ain financial markets, Hong Kong\u2019s \u201csafe \u000d\u000aharbour\u201d status is being highlighted, \u000d\u000aoffering security and stability to global \u000d\u000ainvestors seeking a safety net, said \u000d\u000aJoseph Chan, Under Secretary for \u000d\u000aFinancial Services and the Treasury of \u000d\u000athe Hong Kong Special Administrative \u000d\u000aRegion.\u000d\u000a\u201cIn uncertain times with market volatility, the safe harbour function of Hong \u000d\u000aKong stands out,\u201d he said. \u000d\u000aUnder the \u201cone country, two systems\u201d \u000d\u000aprinciple, the region is under China\u2019s \u000d\u000asovereignty, which is \u201cextremely stable \u000d\u000aand offers stability and safety\u201d for investors, said Mr Chan.\u000d\u000a\u201cDuring the 1998 Asian financial \u000d\u000acrisis, the Sept 11 attack in 2001, and the \u000d\u000aglobal financial crisis in 2008, Hong \u000d\u000aKong always stood firm on our policy of \u000d\u000afree flow of capital. During those \u000d\u000aperiods, some other Asian economies \u000d\u000afaced pressure, but we did not,\u201d he told \u000d\u000athe Bangkok Post.\u000d\u000aAmid geopolitical uncertainty and market volatility, Hong Kong offers security \u000d\u000aand stability to global investors, WRITES NAREERAT WIRIYAPONG\u000d\u000aThe Hong Kong dollar is pegged to the \u000d\u000aUS dollar and has ample foreign currency reserves of around US$442 billion, \u000d\u000aallowing the city to weather any storm, \u000d\u000asaid Mr Chan. \u000d\u000a\u201cIn good times when the markets are \u000d\u000abullish, people might not pay attention \u000d\u000ato the importance of safety and stability. \u000d\u000aHowever, during periods of market volatility and geopolitical uncertainty a safe \u000d\u000aharbour stands out more clearly,\u201d he said.\u000d\u000aGLOBAL LISTING PLATFORM\u000d\u000aSpeaking to potential investors in \u000d\u000aBangkok, Mr Chan affirmed Hong Kong \u000d\u000ais a major global listing platform for \u000d\u000acompanies from different jurisdictions.\u000d\u000aThe government, the Securities and \u000d\u000aFutures Commission (SFC) and Hong \u000d\u000aKong Exchanges and Clearing Limited \u000d\u000a(HKEX) are committed to strengthening \u000d\u000athe breadth and depth of the Hong Kong \u000d\u000alisting platform and securities market, \u000d\u000aattracting different types of companies \u000d\u000aand investors from the mainland and \u000d\u000aoverseas to participate in investment \u000d\u000aand fundraising activities.\u000d\u000a\u201cWe are committed to attracting companies of various sizes with growth \u000d\u000apotential from around the world to list \u000d\u000aand raise funds in Hong Kong,\u201d he said.\u000d\u000aTo this end, HKEX streamlined the \u000d\u000alisting requirements for overseas issuers \u000d\u000aand introduced a set of core shareholder \u000d\u000aprotection standards applicable to all \u000d\u000aissuers to facilitate compliance. The \u000d\u000abourse also issued guidance for overseas \u000d\u000aissuers seeking to list in Hong Kong and \u000d\u000apublished further jurisdiction-specific \u000d\u000aexplanatory notes. \u000d\u000aFollowing the inclusion of the Saudi \u000d\u000aExchange, the Indonesia Stock Exchange, \u000d\u000athe Abu Dhabi Securities Exchange and \u000d\u000athe Dubai Financial Market in the list of \u000d\u000arecognised stock exchanges in 2023 and \u000d\u000a2024, HKEX added the Stock Exchange \u000d\u000aof Thailand in March 2025, bringing the \u000d\u000atotal number of recognised overseas \u000d\u000aexchanges to 20.\u000d\u000aIn 2025, Hong Kong welcomed 119 \u000d\u000anew listings, with initial public offering \u000d\u000a(IPO) funds raised exceeding HK$280 \u000d\u000abillion, ranking first globally. In the first \u000d\u000athree months of this year, Hong Kong \u000d\u000arecorded 40 IPOs, with funds raised \u000d\u000aexceeding HK$109 billion, No.1 globally for that period. \u000d\u000aAverage daily turnover on the bourse \u000d\u000alast year was close to HK$250 billion, up \u000d\u000aby 90% from 2024. The rate exceeded \u000d\u000aHK$270 billion in the first quarter of \u000d\u000a2026, up 14% year-on-year.\u000d\u000aMr Chan said the government, SFC \u000d\u000aand HKEX, will continue promotion \u000d\u000aefforts to showcase the latest developments and strengths of Hong Kong\u2019s \u000d\u000afinancial services sector, including the \u000d\u000alisting platform.\u000d\u000aSAFE HARBOUR FOR INVESTORS\u000d\u000aTHAILAND IS A \u000d\u000aVERY ATTRACTIVE \u000d\u000aINVESTMENT LOCATION \u000d\u000aAS ONE OF THE \u000d\u000aBIGGEST ECONOMIES \u000d\u000aIN SOUTHEAST ASIA. \u000d\u000aWE BELIEVE WE CAN \u000d\u000aHELP MAINLAND \u000d\u000aCOMPANIES DEEPEN \u000d\u000aTHEIR BUSINESS IN \u000d\u000aTHAILAND.\u000d\u000aJOSEPH CHAN,\u000d\u000aUNDER SECRETARY FOR FINANCIAL \u000d\u000aSERVICES AND THE TREASURY, \u000d\u000aHONG KONG SAR\u000d\u000aHKEX wants to explore expanding the \u000d\u000ascope of recognised stock exchanges \u000d\u000aand simplifying the listing process for \u000d\u000aoverseas issuers, offering listing guidance for potential issuers, he said.","REVIEWS AND REFORMS\u000d\u000aHong Kong ranks third in the Global \u000d\u000aFinancial Centres Index after New York \u000d\u000aand London. Compared with other cities \u000d\u000ain Asia, it tops the list, ahead of \u000d\u000aSingapore, Shanghai and Tokyo.\u000d\u000aHong Kong is the world leader in \u000d\u000afintech offerings and tops global rankings \u000d\u000ain the banking, insurance and finance \u000d\u000asectors. The city hosts around 1,200 \u000d\u000afintech companies and startups, driven \u000d\u000aby the InvestHK initiative and robust regulatory support, said Mr Chan.\u000d\u000aAccording to the Global Wealth Report \u000d\u000a2026 published by the Boston Consulting \u000d\u000aGroup last month, Hong Kong is now the \u000d\u000aworld\u2019s largest cross-boundary wealth \u000d\u000amanagement centre. Moreover, the city \u000d\u000aboasts the highest volume of green and \u000d\u000asustainable international bonds in Asia, \u000d\u000aholding about 40% of the market share.\u000d\u000a\u201cThese figures show why we are resilient despite global market volatility. We \u000d\u000abelieve Hong Kong is a good place to \u000d\u000aleverage financial services to serve the \u000d\u000aeconomic needs of various Asian countries,\u201d he said.\u000d\u000aTo maintain its global rankings and \u000d\u000aenhance its attractiveness, Hong Kong \u000d\u000acontinues to review the listing regime \u000d\u000aand promote reform to enhance efficiency and competitiveness, said Mr \u000d\u000aChan.\u000d\u000aFor example, he said the SFC and \u000d\u000aHKEX enhanced the approval time \u000d\u000aframe for new listing applications in \u000d\u000a2024, improving the transparency and \u000d\u000aefficiency of the process, and providing \u000d\u000agreater certainty on the vetting time to \u000d\u000afacilitate the listing of quality enterprises, while upholding the public interest.\u000d\u000aEnterprises with a dual primary \u000d\u000alisting that meet the relevant eligibility \u000d\u000acriteria are eligible for inclusion in \u000d\u000aSouthbound trading on Stock Connect, \u000d\u000awhich enables eligible mainland investors to trade stocks listed on HKEX.\u000d\u000aBuilding on enhancements to the \u000d\u000alisting regime for overseas issuers, HKEX \u000d\u000areviews the scope of recognised stock \u000d\u000aexchanges to enable companies listed \u000d\u000aon overseas main markets to seek secondary listing in Hong Kong, noted Mr \u000d\u000aChan.\u000d\u000a\u201cOur past reforms have borne fruit \u000d\u000aand we need to keep going. We are \u000d\u000alooking into widening and deepening \u000d\u000aour Connect schemes with mainland \u000d\u000amarkets,\u201d he said.\u000d\u000aThe Connect schemes are a set of \u000d\u000amutual market access programmes \u000d\u000aHong Kong offers security \u000d\u000aand stability to global \u000d\u000ainvestors seeking a \u000d\u000asafety net, says Mr Chan.\u000d\u000alinking Hong Kong and international \u000d\u000ainvestors with mainland markets \u000d\u000a(Shanghai, Shenzhen) for stocks, bonds \u000d\u000aand exchange-traded funds. Launched \u000d\u000ain 2014, it allows Northbound trading \u000d\u000a(investing in China A-shares) and \u000d\u000aSouthbound trading (mainland investors accessing Hong Kong stocks).\u000d\u000aThe Hong Kong government wants to \u000d\u000aenhance operational efficiency and \u000d\u000aelevate the city\u2019s financial market infrastructure by promoting the Uncertificated \u000d\u000aSecurities Market, a paperless securities \u000d\u000asystem, said Mr Chan.\u000d\u000a\u201cAll these initiatives can improve our \u000d\u000aeffectiveness, efficiency and attractiveness, thereby attracting more liquidity,\u201d \u000d\u000ahe said.\u000d\u000a\u201cWe continue to maintain a close dialogue with the industry to ensure the \u000d\u000aentire system and process are transparent to them. We embed the best international practices and standards in our \u000d\u000alocal markets, and that\u2019s why we enjoy \u000d\u000astrong confidence from global investors. \u000d\u000aWithout transparency, clarity or predictability, it\u2019s difficult to do business.\u201d\u000d\u000aSUPER CONNECTOR\u000d\u000a\u201cWe see Hong Kong as a super connector between China and the rest of the \u000d\u000aworld. Hong Kong is unique because it \u000d\u000aprovides preferential access to the mainland market. China is the second-largest \u000d\u000aeconomy in the world and set a growth \u000d\u000atarget of around 5% per year,\u201d said Mr \u000d\u000aChan.\u000d\u000aThe \u201cone country, two systems\u201d principle allows Hong Kong to combine the \u000d\u000astrengths of China and the global \u000d\u000amarket, he said.\u000d\u000a\u201cHong Kong and the mainland market \u000d\u000aare closely connected in two ways. We \u000d\u000aattract global businesses to invest in the \u000d\u000amainland through Hong Kong, while \u000d\u000aalso helping mainland companies to \u000d\u000aexpand overseas. This makes Hong Kong \u000d\u000aa super connector and two-way facilitator,\u201d said Mr Chan. \u000d\u000a\u201cThailand is a very attractive investment location as one of the biggest economies in Southeast Asia. Given our role \u000d\u000aas a super connector, we believe we can \u000d\u000ahelp mainland companies deepen their \u000d\u000abusiness in Thailand. We will help investors from the mainland interested in \u000d\u000aoverseas markets to invest in Thailand \u000d\u000aas well.\u000d\u000a\u201cWe look forward to more cooperation in the future, as Hong Kong can play \u000d\u000aa key role in facilitating mainland investors\u2019 expansion in Thailand.\u201d","The global and Thai economic outlooks this year continue to be \u000d\u000ashaped by major conflicts with \u000d\u000afar-reaching repercussions.\u000d\u000aThe Russia-Ukraine war, which began \u000d\u000ain February 2022, has yet to end. As US \u000d\u000aPresident Donald Trump\u2019s tariffs rattled \u000d\u000aglobal markets three years on, the US \u000d\u000aand Israel launched strikes on Iran \u000d\u000aearlier this year. The Strait of Hormuz, \u000d\u000aan essential artery for global energy \u000d\u000aexports, was subsequently closed, triggering a worldwide energy crisis.\u000d\u000aThe Thai economy has been squeezed \u000d\u000aby rising global energy prices and concerns over energy shortages. Thailand \u000d\u000aalso faces pressure from fiscal constraints, as public debt has risen to 66% \u000d\u000aof GDP, approaching the ceiling of 70%, \u000d\u000adue largely to populist policies and borrowing of 1.5 trillion baht to mitigate the \u000d\u000apandemic impact during the Prayut \u000d\u000aChan-o-cha administration.\u000d\u000aAs a result, the incumbent government\u2019s ability to use fiscal measures to \u000d\u000astimulate the economy is restricted.\u000d\u000aPALTRY FORECAST\u000d\u000aThe Fiscal Policy Office (FPO), one of the \u000d\u000agovernment agencies responsible for \u000d\u000aeconomic forecasting, announced on \u000d\u000aApril 28 it downgraded this year\u2019s GDP \u000d\u000agrowth forecast to 1.6% from 2%, citing \u000d\u000athe Middle East conflict that it predicted \u000d\u000awould be resolved by mid-year.\u000d\u000aVinit Visessuvanapoom, directorgeneral of the FPO, said the economy is \u000d\u000aon a gradual recovery path but continues \u000d\u000ato face headwinds from external factors \u000d\u000aand global geopolitics.\u000d\u000aExports remain a bright spot as soaring energy costs put the nation in\u000d\u000aa vulnerable position, WRITE WICHIT CHANTANUSORNSIRI AND SOMHATAI MOSIKA\u000d\u000aExports remain essential to the Thai \u000d\u000aeconomy, and they are projected to \u000d\u000aexpand by 6.2% this year, down from \u000d\u000a12.7% last year.\u000d\u000aPrivate consumption is projected to \u000d\u000agrow by 2.3%, close to last year\u2019s 2.7%, \u000d\u000awhile private investment is expected to \u000d\u000aexpand by 3.2%, down from 3.5% last \u000d\u000ayear. Headline inflation is forecast at 3%, \u000d\u000aup from -0.1% last year.\u000d\u000aRisks that warrant monitoring this \u000d\u000ayear include volatile energy prices, with \u000d\u000aDubai crude oil averaging US$91.2 per \u000d\u000abarrel year-to-date, compared with \u000d\u000a$69.4 per barrel in 2025.\u000d\u000aThe FPO predicts an average Dubai \u000d\u000acrude price this year of $91 per barrel.\u000d\u000aMr Vinit said other factors to watch \u000d\u000ainclude trade volatility, even though \u000d\u000apressure from US tariffs has eased, as \u000d\u000awell as impacts from the El Ni\u00f1o weather \u000d\u000apattern, household debt, and small business debt.\u000d\u000aThailand is not at risk of stagflation as \u000d\u000aGDP is still expanding, but vigilance is \u000d\u000aneeded to prevent overlapping crises, \u000d\u000ahe noted.\u000d\u000aFor the forecast, the FPO assumed \u000d\u000aeconomic growth among Thailand\u2019s 15 \u000d\u000akey trading partners would average 3%, \u000d\u000aslightly down from the January forecast \u000d\u000aof 3.1% and lower than last year\u2019s 3.6%. \u000d\u000aThe baht is expected to average 32 per \u000d\u000aUS dollar this year, appreciating by 2.7% \u000d\u000afrom the previous year, supported by a \u000d\u000aweaker US dollar and expectations the \u000d\u000aFederal Reserve will not cut interest \u000d\u000arates this year or next.\u000d\u000aForeign tourist arrivals are projected \u000d\u000ato reach 33.5 million for the year, up 1.6% \u000d\u000afrom last year. Tourism revenue is \u000d\u000aexpected to tally 1.5 trillion baht, a gain \u000d\u000aof 0.4%, while average spending per \u000d\u000atourist per trip is estimated at 45,100 \u000d\u000abaht, down 1.2% from last year.\u000d\u000aPublic expenditure is projected at \u000d\u000a4.43 trillion baht, expanding by 2.4%.\u000d\u000aWAR SCENARIOS\u000d\u000aOver the past 25 years, Thai GDP growth \u000d\u000ahas steadily declined. According to the \u000d\u000aNational Economic and Social \u000d\u000aDevelopment Council (NESDC), Thai \u000d\u000aGDP growth reached a high of 7.8% in \u000d\u000a2010, then plunged to 0.1% in 2011 due \u000d\u000ato severe flooding.\u000d\u000aFrom 2013 to 2026, annual GDP \u000d\u000agrowth has mostly remained less than \u000d\u000a3%, with exceptions in 2016, 2017 and \u000d\u000a2018 when growth tallied 3.2%, 3.9% and \u000d\u000a4.1%, respectively.\u000d\u000aThe NESDC outlined economic scenarios for Thailand this year. If the conflict in the Middle East ends in the first \u000d\u000ahalf of the year, Thai economic growth \u000d\u000ais projected to register 1.4% this year and \u000d\u000a2.2% next year, down from 2% this year \u000d\u000aand 2.6% next year if the war never happened. Crude oil prices are expected to \u000d\u000aaverage $90 per barrel this year and $75 \u000d\u000anext year.\u000d\u000aIf the war ends in the second half of \u000d\u000athe year, GDP growth is projected at 0.8% \u000d\u000athis year and 2% next year, with crude \u000d\u000aaveraging $110 this year and $95 next \u000d\u000ayear.\u000d\u000aFISCAL, EXTERNAL RISKS CLOUD THAI OUTLOOK\u000d\u000aMACROECONOMY\u000d\u000aGLOBAL BUYERS \u000d\u000aREQUESTING STABLE \u000d\u000aFINISHED PRODUCT \u000d\u000aPRICES REFLECTS A \u000d\u000aSTRUCTURAL LIMITATION \u000d\u000aIN THAILAND\u2019S EXPORT \u000d\u000aSECTOR, WHERE MANY \u000d\u000aINDUSTRIES OPERATE \u000d\u000aAS PRICE TAKERS WITH \u000d\u000aLIMITED BARGAINING \u000d\u000aPOWER COMPARED WITH \u000d\u000aLARGE GLOBAL BUYERS.\u000d\u000aDHANAKORN KASETRSUWAN,\u000d\u000aCHAIRMAN, THAI NATIONAL \u000d\u000aSHIPPERS\u2019 COUNCIL\u000d\u000aThe Thai National Shippers\u2019 \u000d\u000aCouncil warns that exports still \u000d\u000aface significant external pressures \u000d\u000ain the second half of the year, with \u000d\u000athe outlook uncertain.\u000d\u000aIf the conflict escalates and continues \u000d\u000ainto the first half of 2027, Thai GDP \u000d\u000agrowth is expected to be 0.7% this year \u000d\u000aand 1.4% next year, with oil prices at \u000d\u000a$115 this year and $110 next year, \u000d\u000aaccording to the think tank.\u000d\u000aFISCAL LIFELINE\u000d\u000aFinance Minister Ekniti Nitithanprapas \u000d\u000adescribed Thailand\u2019s economic outlook \u000d\u000aas resembling an old car stuck in the \u000d\u000amire, where the key engines of the \u000d\u000aeconomy \u2014 consumption, investment \u000d\u000aand exports \u2014 all face challenges, \u000d\u000aleaving only the fiscal engine running.\u000d\u000aThe interim Anutin Charnvirakul \u000d\u000aadministration implemented the \u201cKhon \u000d\u000aLa Khrueng Plus\u201d co-payment scheme, \u000d\u000aa measure previously used during the \u000d\u000aPrayut tenure to stimulate consumption \u000d\u000aand reduce the cost of living. The programme cost more than 40 billion baht, \u000d\u000aand the Finance Ministry claimed it \u000d\u000ahelped lift economic growth in the \u000d\u000afourth quarter of 2025 to 2.5%, compared with an earlier projection of 0.3%.\u000d\u000aThe current government wants to \u000d\u000acontinue this policy, dubbed \u201cThai \u000d\u000aChuay Thai\u201d (Thais Help Thais). \u000d\u000aRegistration opened in May, with spend6 MID-YEAR ECONOMIC REVIEW 2026","ing under the scheme slated to start on \u000d\u000aJune 1. Roughly 30 million people are \u000d\u000aexpected to participate.\u000d\u000aThe scheme adjusts its co-payment \u000d\u000astructure from 50:50 to 60:40, and eligible participants receive 1,000 baht per \u000d\u000amonth for four months starting in June. \u000d\u000aFunding is expected to come from a \u000d\u000abudget reallocation bill using unused \u000d\u000afunds from fiscal 2026, estimated at \u000d\u000a80-100 billion baht.\u000d\u000aMr Ekniti said the key to reviving \u000d\u000aThailand\u2019s economy, which he described \u000d\u000aas \u201cthe sick man of Asia\u201d, is increasing \u000d\u000adomestic investment. Before 1997, total \u000d\u000ainvestment (public and private) \u000d\u000aaccounted for as much as 40% of GDP, \u000d\u000abut now it has fallen to 24%. The government wants to remove legal and bureaucratic obstacles by pushing forward an \u000d\u000aomnibus law.\u000d\u000aIn 2025, investment applications submitted through the Board of Investment \u000d\u000a(BoI) tallied 1.8 trillion baht, up 60% \u000d\u000afrom the previous year. They were concentrated in smart agriculture, food \u000d\u000aprocessing, smart electronics, automobiles and wellness.\u000d\u000aRoughly 900 billion baht from these \u000d\u000aapplications are projected to materialise \u000d\u000ainto actual investments this year, said \u000d\u000athe BoI.\u000d\u000aThe government reaffirmed its commitment to a medium-term fiscal framework aimed at reducing the budget \u000d\u000adeficit to no more than 3% of GDP by \u000d\u000a2030. The 2027 budget is set at 3.78 trillion baht, representing a 0.2% increase \u000d\u000afrom the previous year, while borrowing \u000d\u000ato finance the deficit is reduced by 8.4%, \u000d\u000ain line with a goal of maintaining fiscal \u000d\u000adiscipline.\u000d\u000aEXPORT HEADWINDS\u000d\u000aExports will continue to face significant \u000d\u000aexternal pressures in the second half of \u000d\u000athe year, with the outlook highly uncertain, according to the Thai National \u000d\u000aShippers\u2019 Council (TNSC).\u000d\u000aKey challenges include an uneven \u000d\u000aglobal economic recovery, the monetary \u000d\u000apolicy directions of major economies, \u000d\u000avolatile logistics costs, and ongoing geopolitical risks that are straining global \u000d\u000asupply chains.\u000d\u000aUnder the best-case scenario, if major \u000d\u000aeconomies such as the US and China \u000d\u000amaintain their recovery, inflation eases, \u000d\u000aand transport costs stabilise, Thai \u000d\u000aexports could grow by 0\u20132% this year, \u000d\u000aaccording to the council.\u000d\u000aIn contrast, under a worst-case \u000d\u000ascenario where the global economy \u000d\u000aexperiences a synchronised slowdown \u000d\u000aas geopolitical tensions around the \u000d\u000aRed Sea affect shipping routes, \u000d\u000alogistics costs and transit times would \u000d\u000arise sharply. In this case, Thai exports \u000d\u000acould contract by 1-3%, noted the \u000d\u000aTNSC.\u000d\u000aDhanakorn Kasetrsuwan, chairman \u000d\u000aof the council, said exporters face multiple pressures as global purchasing \u000d\u000apower remains fragile, particularly for \u000d\u000aindustrial and discretionary goods, \u000d\u000aslowing the recovery for orders.\u000d\u000aThe global logistics system is volatile, \u000d\u000awith fluctuations in freight rates, transit \u000d\u000atimes and route reliability. Exchange \u000d\u000arate movements, especially for the \u000d\u000abaht, continue to affect pricing and \u000d\u000acompetitiveness.\u000d\u000aNew trade barriers, especially environmental measures such as the Carbon \u000d\u000aBorder Adjustment Mechanism and \u000d\u000asustainability standards, are becoming \u000d\u000amore prominent. Rising raw material \u000d\u000aand energy costs, particularly in the \u000d\u000apetrochemical sector, are another \u000d\u000aconcern, said Mr Dhanakorn.\u000d\u000aMany exporters report rising input \u000d\u000aand energy costs, while global buyers \u000d\u000aare requesting stable finished product \u000d\u000aprices due to constrained purchasing \u000d\u000apower. As a result, exporters are forced \u000d\u000ato absorb higher costs, leading to \u000d\u000adeclining profit margins and increased \u000d\u000aliquidity pressure, especially among \u000d\u000asmall and medium-sized enterprises \u000d\u000a(SMEs), he noted.\u000d\u000a\u201cThis reflects a structural limitation \u000d\u000ain Thailand\u2019s export sector, where many \u000d\u000aindustries operate as price takers with \u000d\u000alimited bargaining power compared \u000d\u000awith large global buyers,\u201d said Mr \u000d\u000aDhanakorn.\u000d\u000aSECTORAL IMPACTS\u000d\u000aRegarding product categories, he said \u000d\u000aindustrial goods and lifestyle products \u000d\u000asuch as electronics, furniture and luxury \u000d\u000aitems are more severely affected due to \u000d\u000atheir reliance on global demand cycles \u000d\u000aand sensitivity to raw material costs.\u000d\u000aMeanwhile, food, agricultural and \u000d\u000ahealth-related products are less affected, \u000d\u000aas they are essential goods with steady \u000d\u000ademand.\u000d\u000aFor imports, raw materials and capital \u000d\u000agoods are affected by the slowdown in \u000d\u000amanufacturing, while demand for \u000d\u000aenergy and essential goods remains \u000d\u000astable, said Mr Dhanakorn.\u000d\u000aDespite short-term challenges, the \u000d\u000aTNSC views the global crisis as a catalyst \u000d\u000afor substantial global supply chain \u000d\u000areconfiguration, presenting opportunities for Thailand. For example, Thailand \u000d\u000ahas potential as an alternative production base under the China+1 strategy, \u000d\u000aand has a growing role in food security \u000d\u000aas a reliable producer and exporter. The \u000d\u000acountry is also attempting to expand \u000d\u000aregional trade, particularly within Asia, \u000d\u000awhile the transition towards greener \u000d\u000asupply chains offers both challenges and \u000d\u000aopportunities for industrial upgrades, \u000d\u000anoted the council.\u000d\u000aExporters are absorbing higher \u000d\u000acosts, leading to declining \u000d\u000aprofit margins and increased \u000d\u000aliquidity pressure, especially \u000d\u000aamong small firms. Photo: \u000d\u000aArnun Chonmahatrakool\u000d\u000aRECOMMENDATIONS\u000d\u000aTo enhance competitiveness and seize \u000d\u000athese opportunities while managing \u000d\u000ashort-term risks, he said coordinated \u000d\u000aaction is needed.\u000d\u000aMr Dhanakorn suggested the government accelerate efforts to reduce structural costs, particularly in energy and \u000d\u000alogistics, while supporting business \u000d\u000aliquidity for SMEs and expediting negotiations on new free trade agreements.\u000d\u000aIn addition, authorities should \u000d\u000adevelop trade and logistics infrastructure, and promote the transition to a \u000d\u000agreen economy, he noted.\u000d\u000aThe private sector should focus on \u000d\u000aupgrading to higher value-added \u000d\u000aproducts, strengthening branding to \u000d\u000areduce reliance on price competition, \u000d\u000adiversifying into new markets, investing \u000d\u000ain technology and innovation, and \u000d\u000aimproving risk management related to \u000d\u000aexchange rates and rising costs, said Mr \u000d\u000aDhanakorn.\u000d\u000a\u201cIn the short term, the export sector \u000d\u000ais under pressure from rising costs, particularly petrochemical inputs, while \u000d\u000abeing unable to adjust selling prices due \u000d\u000ato weak global demand. This forces \u000d\u000aexporters to absorb costs and results in \u000d\u000asteadily declining margins,\u201d he said.\u000d\u000a\u201cHowever, in the medium to long \u000d\u000aterm, if Thailand can adapt to global \u000d\u000asupply chain shifts and upgrade its \u000d\u000aproduction structure towards higher \u000d\u000avalue-added goods, it has the potential \u000d\u000ato become a sustainable production and \u000d\u000atrading hub in the region.\u201d\u000d\u000aPolicymakers project \u000d\u000ashipments to grow by \u000d\u000a6.2% this year, down \u000d\u000afrom 12.7% in 2025.\u000d\u000aMID-YEAR ECONOMIC REVIEW 2026 7","Finding raw materials to replace \u000d\u000aoil-based products is emerging \u000d\u000aas a potential solution to the \u000d\u000aenergy crisis triggered by the \u000d\u000aIsrael-US conflict with Iran.\u000d\u000aAs power producers turn to renewable energy to cut reliance on fossil fuels \u000d\u000aand exporters seek markets beyond the \u000d\u000aMiddle East, factory operators are \u000d\u000asearching for alternative raw materials \u000d\u000aamid a shortage of oil based supplies \u000d\u000afrom the region.\u000d\u000aThe petrochemical and automotive \u000d\u000aindustries bore the brunt of a surge in \u000d\u000aglobal oil and gas prices and shortages \u000d\u000aof key raw materials as a result of transport disruptions in the Strait of Hormuz.\u000d\u000aPetrochemical companies are using \u000d\u000avarious methods to deal with the shortage of raw materials, including using \u000d\u000anew feedstocks and temporarily shutting down factories.\u000d\u000aElectric vehicle (EV) makers are considering options to survive the tough \u000d\u000aperiod caused by a shortage of car components, though the Middle East tensions are helping to drive EV sales this \u000d\u000ayear.\u000d\u000aAs the energy shock leads to contingency plans, manufacturers \u000d\u000asearch for new raw materials to shift from oil-based resources, \u000d\u000aWRITES LAMONPHET APISITNIRAN\u000d\u000aALTERNATIVE FEEDSTOCKS\u000d\u000aPetrochemical producers in Asia such \u000d\u000aas Thailand, South Korea and China are \u000d\u000ajoined by Brazil in an effort to retrofit \u000d\u000anaphtha based steam crackers to run on \u000d\u000aimported US ethane as a key feedstock \u000d\u000afor petrochemical production.\u000d\u000aSCG Chemicals (SCGC), a subsidiary \u000d\u000aof Siam Cement Group (SCG), Thailand\u2019s \u000d\u000alargest cement maker and industrial \u000d\u000aconglomerate, is upgrading its Long Son \u000d\u000aPetrochemicals (LSP) complex in \u000d\u000aVietnam to use more ethane.\u000d\u000aThe Middle East tensions are not only \u000d\u000adriving up global energy prices, but also \u000d\u000adisrupting supplies of crude oil-derived \u000d\u000anaphtha.\u000d\u000aThe war caused SCGC to suspend \u000d\u000aoperations at LSP, which just opened late \u000d\u000alast year. The company is using the downtime to accelerate maintenance and push \u000d\u000aforward its ethane feedstock enhancement project at LSP, which is 54% complete and scheduled to be operational by \u000d\u000a2027, said Sakchai Patiparnpreechavud, \u000d\u000achief executive of SCGC.\u000d\u000aEthane, a colourless, odourless, \u000d\u000agaseous hydrocarbon, can help the \u000d\u000aINDUSTRY EAGER FOR ALTERNATIVES\u000d\u000aELECTRIC \u000d\u000aCOMMERCIAL \u000d\u000aVEHICLES SUCH AS \u000d\u000aTRUCKS, VANS AND \u000d\u000aPICKUPS WILL BE THE \u000d\u000aMAIN DRIVERS OF EV \u000d\u000aGROWTH THIS YEAR, \u000d\u000aWHICH SHOULD BE \u000d\u000aA BREAKTHROUGH \u000d\u000aFOR COMMERCIAL \u000d\u000aBEVS AS LOGISTICS \u000d\u000aFIRMS, TRANSPORT \u000d\u000aOPERATORS AND \u000d\u000aGOVERNMENT \u000d\u000aAGENCIES LOOK TO \u000d\u000aREDUCE FUEL COSTS.\u000d\u000aSUROJ SANGSANIT,\u000d\u000aPRESIDENT, ELECTRIC VEHICLE \u000d\u000aASSOCIATION OF THAILAND\u000d\u000aINDUSTRY\u000d\u000a Continued on page 10\u000d\u000aThe Long Son Petrochemicals \u000d\u000aplant in Vietnam is getting an \u000d\u000aupgrade to use ethane as a \u000d\u000araw material.\u000d\u000acompany lower feedstock costs by more \u000d\u000athan 30% compared with the current \u000d\u000anaphtha price.\u000d\u000aThis would help SCGC avoid the \u000d\u000aimpact of crude oil price volatility, which \u000d\u000aaffects naphtha prices, leading to expensive raw materials, said Mr Sakchai.\u000d\u000aThe 173-billion-baht LSP is designed \u000d\u000ato produce 1.4 million tonnes of olefins.\u000d\u000aThe facility initially employs flexible \u000d\u000atechnology allowing switching between \u000d\u000anaphtha and propane feedstocks, with \u000d\u000apropane currently accounting for 70% \u000d\u000aof input to cut costs. The company later \u000d\u000adecided to add ethane storage and processing capacity to further reduce costs.\u000d\u000aSCGC previously secured a 15-year \u000d\u000aethane supply agreement from the US.\u000d\u000aBetter cost management is a component of SCG\u2019s financial management to \u000d\u000asurvive business challenges, including \u000d\u000athe global supply chain disruptions \u000d\u000acaused by war in the Middle East, he \u000d\u000asaid.\u000d\u000a\u201cWe also maintain strict financial discipline to ensure a strong financial position,\u201d said Thammasak Sethaudom, \u000d\u000apresident and chief executive of SCG.\u000d\u000a8 MID-YEAR ECONOMIC REVIEW 2026","","OLEFIN BOOSTER\u000d\u000aThough the energy crisis caused SCGC \u000d\u000ato temporarily shut down its olefin \u000d\u000afactory in Rayong, the company remains \u000d\u000ahopeful that the business will be \u000d\u000aresilient, he said.\u000d\u000aThe Strait of Hormuz blockade \u000d\u000arestricted the shipment of key raw materials to Rayong Olefins such as naphtha \u000d\u000aand propane, essential raw materials for \u000d\u000aSCGC\u2019s olefins plants.\u000d\u000aRayong Olefins declared force \u000d\u000amajeure to its partners and customers \u000d\u000ain accordance with its contractual rights. \u000d\u000aThe plant shutdown is estimated to \u000d\u000aaffect costs by roughly 150 million baht \u000d\u000aa month.\u000d\u000aDespite the shutdown, SCGC \u000d\u000aannounced it signed a memorandum of \u000d\u000aunderstanding with PTT Global \u000d\u000aChemical to study the feasibility of \u000d\u000ajointly developing olefins and polyolefins businesses.\u000d\u000aThe move aims to strengthen \u000d\u000aThailand\u2019s petrochemical supply chains \u000d\u000aand ensure industry sustainability, \u000d\u000agrowth and competitiveness, said Mr \u000d\u000aThammasak.\u000d\u000aOlefins are made from naphtha, \u000d\u000apropane and ethane. While ethane and \u000d\u000apropane are considered cost-competitive feedstocks, naphtha is usually used \u000d\u000ain Asia and Europe due to availability \u000d\u000aand flexibility. \u000d\u000aTwo types of olefins \u2014 ethylene and \u000d\u000apropylene \u2014 are turned into polyethylene and polypropylene, which are the \u000d\u000amost common plastics in packaging, \u000d\u000abottles and household goods.\u000d\u000aOlefins are also used to make \u000d\u000asynthetic materials used in textiles, auto \u000d\u000aparts and construction materials.\u000d\u000aEVs ON ALERT\u000d\u000aRising oil prices may push more buyers \u000d\u000atoward EVs, but manufacturers face \u000d\u000ashortages of critical components needed \u000d\u000ato build them.\u000d\u000aRaw material shortages, including \u000d\u000afor plastics and helium, the latter of \u000d\u000awhich is critical for semiconductor \u000d\u000aproduction, are pressuring manufacturers, said Cedric Cui, president of \u000d\u000aOmoda & Jaecoo (Thailand), a subsidiary of Chinese automaker Chery \u000d\u000aAutomobile.\u000d\u000aAttacks on Qatar\u2019s Ras Laffan facility, \u000d\u000aone of the world\u2019s largest helium hubs, \u000d\u000ahave knocked out about one-third of \u000d\u000aglobal supply, according to media \u000d\u000areports.\u000d\u000aThe shortage is threatening chipmakers in Asia, including those supplying Thailand\u2019s automotive industry.\u000d\u000aWallop Chalermvongsavej, managing \u000d\u000adirector of Hyundai Mobility Thailand, \u000d\u000asaid global automakers can manage the \u000d\u000ashortage in the short term, but if the \u000d\u000aconflict drags on the situation could \u000d\u000aworsen.\u000d\u000aThe chip shortage will affect car production, leading to manufacturing slowdowns and higher operating costs amid \u000d\u000aoil price volatility, he said, eventually \u000d\u000amaking vehicles more expensive.\u000d\u000aDespite these hurdles, Mr Cui pledged \u000d\u000aOmoda & Jaecoo would not raise car \u000d\u000aprices because it does not want to \u000d\u000aincrease the burden on customers.\u000d\u000a Continued from page 8\u000d\u000aINDUSTRY\u000d\u000aA large ethane carrier plies \u000d\u000athe open waters. SCGC \u000d\u000asecured a 15-year ethane \u000d\u000asupply agreement from the \u000d\u000aUS, part of efforts to better \u000d\u000acontrol production costs.\u000d\u000aPrime Minister Anutin Charnvirakul \u000d\u000agets into his battery EV. BEVs are \u000d\u000abecoming more popular as global oil \u000d\u000aprices surge. Photo: Chanat Katanyu\u000d\u000aChris Wu, vice-president of Changan \u000d\u000aAuto Sales Thailand, said the company \u000d\u000aalso does not expect to increase EV \u000d\u000aprices, with the parent firm in China \u000d\u000apredicted to offer measures to support \u000d\u000asales of Changan cars in Thailand.\u000d\u000aThe surge in global oil prices is good \u000d\u000afor battery EVs, with sales projected to \u000d\u000asurpass 120,000 units this year, said the \u000d\u000aElectric Vehicle Association of Thailand \u000d\u000a(EVAT).\u000d\u000aAccording to the Federation of Thai \u000d\u000aIndustries (FTI), domestic BEV sales in \u000d\u000athe passenger category surged by 80% \u000d\u000alast year to 120,301 units.\u000d\u000aElectric commercial vehicles such as \u000d\u000atrucks, vans and pickups will be the \u000d\u000amain drivers of EV growth this year, said \u000d\u000aSuroj Sangsanit, president of EVAT.\u000d\u000aHe said 2026 should be a breakthrough year for commercial BEVs as \u000d\u000alogistics firms, transport operators and \u000d\u000agovernment agencies look to reduce fuel \u000d\u000acosts.\u000d\u000aIn the first quarter of this year, electric \u000d\u000apassenger cars soared by 120% to 50,141 \u000d\u000aunits, while electric pickups rose sharply \u000d\u000aby 227% to 314 units, up from 96 units \u000d\u000ain the same period last year, said the FTI.\u000d\u000aSurapong Paisitpatanapong, spokesman for the FTI\u2019s Automotive Industry \u000d\u000aClub, attributed the increase partly to \u000d\u000agrowing interest in electric mobility \u000d\u000atechnology amid rising oil prices.\u000d\u000aHowever, Christian Schell, chief \u000d\u000aexecutive of Mercedes-Benz Thailand, \u000d\u000acautioned that the shift to BEVs this year \u000d\u000amay not be dramatic because Thai \u000d\u000aconsumers have options such as hybrid \u000d\u000aand plug-in hybrid vehicles, which still \u000d\u000arely on oil.\u000d\u000a10 MID-YEAR ECONOMIC REVIEW 2026","Expanding the use of clean energy \u000d\u000ais seen as a long term answer to \u000d\u000aoil and gas price swings and \u000d\u000asupply disruptions stemming \u000d\u000afrom Middle East tensions.\u000d\u000aThe move is crucial for Thailand, \u000d\u000awhich remains heavily dependent on oil \u000d\u000aand liquefied national gas (LNG) \u000d\u000aimports for use in transport, industry \u000d\u000aand power generation.\u000d\u000aIn addition to using the Oil Fuel Fund \u000d\u000ato regulate oil price fluctuations, Energy \u000d\u000aMinister Akanat Promphan has introduced a new electricity price structure, \u000d\u000ahoping to ease the impact of a surge in \u000d\u000aLNG prices on the country\u2019s power tariff.\u000d\u000aGas, including imported LNG, makes \u000d\u000aup 60% of fuels used for power generation in Thailand. The increase in LNG \u000d\u000aprices often leads to expensive power \u000d\u000abills.\u000d\u000aMr Akanat is intent on modernising \u000d\u000athe country\u2019s power management, using \u000d\u000athe new electricity price structure as a \u000d\u000ashort-term approach to the energy crisis, \u000d\u000apromoting clean energy, notably solar \u000d\u000aenergy, and eventually pushing for free \u000d\u000apower trade.\u000d\u000aWith the war in Iran jolting energy markets, it serves as impetus for Thailand to\u000d\u000aoverhaul its power framework and reform its pricing structure, WRITES YUTHANA PRAIWAN\u000d\u000aNEW PRICING STRUCTURE\u000d\u000aAs electricity prices rise, the minister \u000d\u000aplans to adjust the pricing structure to \u000d\u000aensure electricity remains affordable, \u000d\u000abut this policy has been criticised for \u000d\u000ahelping households rather than businesses.\u000d\u000aThe cabinet resolved to approve electricity pricing reform, aiming to cushion \u000d\u000athe impact of expensive power bills for \u000d\u000athe public.\u000d\u000aUnder the new framework, households benefit from a progressive tariff \u000d\u000astructure. For residential users, the \u000d\u000afirst 200 units of electricity consumption are capped at three baht per unit \u000d\u000afrom June.\u000d\u000aThe government estimates more than \u000d\u000a20 million households \u2014 around 90% of \u000d\u000aresidential users \u2014 will see lower bills \u000d\u000aas a result, according to government \u000d\u000aspokeswoman Rachada Dhnadirek.\u000d\u000aThe power tariff, which is used to calculate electricity bills, was set to increase \u000d\u000afrom 3.88 baht a unit to 3.95 baht a unit, \u000d\u000aapplicable between May and August.\u000d\u000aMr Akanat said the revised structure \u000d\u000awould cut electricity costs by around \u000d\u000aPOISED ON A KNIFE\u2019S EDGE\u000d\u000aTHE DIRECT \u000d\u000aPOWER PURCHASE \u000d\u000aAGREEMENT POLICY \u000d\u000aSHOULD NOT APPLY \u000d\u000aONLY TO COMPANIES. \u000d\u000aHOUSEHOLDS SHOULD \u000d\u000aBE FREE TO BUY \u000d\u000aELECTRICITY FROM \u000d\u000aANY PRODUCER, \u000d\u000aMUCH LIKE SHOPPERS \u000d\u000aCHOOSING GOODS IN A \u000d\u000aMARKET.\u000d\u000aAKANAT PROMPHAN,\u000d\u000aENERGY MINISTER\u000d\u000aENERGY\u000d\u000aMr Akanat, left, walks with Prime Minister Anutin Charnvirakul at Government House after a weekly cabinet meeting. The energy minister believes new electricity pricing will \u000d\u000ahelp people better deal with expensive power bills. Photo: Chanat Katanyu\u000d\u000a20% for households using up to 200 units \u000d\u000aper month, while reducing system costs \u000d\u000aby an estimated 30-40%.\u000d\u000aConsumption between 200 and 400 \u000d\u000aunits is charged 3.95 baht per unit, while \u000d\u000ausage of more than 400 units is likely to \u000d\u000abe priced at 5 baht per unit.\u000d\u000aThe Federation of Thai Industries \u000d\u000a(FTI) cautioned against extending the \u000d\u000atiered pricing model to the industrial \u000d\u000asector because it could disproportionately affect energy-intensive industries, particularly upstream sectors such \u000d\u000aas steel.\u000d\u000aWhile supporting efforts to ease the \u000d\u000aburden on low-income households, the \u000d\u000aFTI argued that applying a \u201chigher \u000d\u000ausage, higher cost\u201d principle to businesses could increase operating costs.\u000d\u000aCLEAN ENERGY PUSH\u000d\u000aMr Akanat is also promoting the use of \u000d\u000aclean energy in the business sector, which \u000d\u000ashould set a model for free power trade.\u000d\u000aIf his push for clean energy gathers \u000d\u000amomentum and paves the way for free \u000d\u000aelectricity trade, he would be the first \u000d\u000aminister to achieve it.\u000d\u000aMID-YEAR ECONOMIC REVIEW 2026 11","ENERGY\u000d\u000aWhile renewable energy reduces \u000d\u000aThailand\u2019s reliance on fossil fuels, which \u000d\u000aare vulnerable to price swings and \u000d\u000asupply shocks, free trade in clean power \u000d\u000awould deliver greater benefits to electricity users.\u000d\u000aMr Akanat said he supports the pilot \u000d\u000adirect power purchase agreement (PPA) \u000d\u000ascheme, which allows businesses to buy \u000d\u000aclean electricity directly from producers. \u000d\u000aThe ministry is considering expanding \u000d\u000aits scope to cover households, he said.\u000d\u000a\u201cThe policy should not apply only to \u000d\u000acompanies. Households should be free \u000d\u000ato buy electricity from any producer, \u000d\u000amuch like shoppers choosing goods in \u000d\u000aa market,\u201d said Mr Akanat.\u000d\u000aThailand has long utilised the \u000d\u000aenhanced single buyer (ESB) system, \u000d\u000awhich makes the Electricity Generating \u000d\u000aAuthority of Thailand (Egat) the sole \u000d\u000apurchaser that sells electricity to the \u000d\u000apublic.\u000d\u000aIf power companies want to sell electricity produced by renewable resources, they are required to sell it to Egat and \u000d\u000astate power distribution agencies, which \u000d\u000athen distribute electricity via the grid to \u000d\u000acompanies and households.\u000d\u000aAccording to a senior energy official \u000d\u000awho requested anonymity, the ESB \u000d\u000aneeds to be changed to prepare Thailand \u000d\u000afor rapidly growing renewable power \u000d\u000ademand, which supports global campaigns aimed at reducing carbon dioxide \u000d\u000aemissions from fossil-derived fuels.\u000d\u000aAuthorities are planning to change \u000d\u000athe ESB system, preparing a pilot direct \u000d\u000aPPA scheme. Peer-to-peer power trade \u000d\u000aof renewable energy is banned, but the \u000d\u000apilot project would ease this regulation.\u000d\u000aImplementation of the direct PPA \u000d\u000ascheme, with a power generation capacity of 2 gigawatts, would extend beyond \u000d\u000athe Eastern Economic Corridor as initially planned because officials want \u000d\u000alocations with adequate renewable \u000d\u000aenergy generation and transmission \u000d\u000ainfrastructure to support the initiative, \u000d\u000aaccording to the Energy Regulatory \u000d\u000aCommission.\u000d\u000aThe government aims to roll out the \u000d\u000adirect PPA scheme first for foreign data \u000d\u000acentre investors, before widening access \u000d\u000ain the coming years to industries such \u000d\u000aas printed circuit boards, electronics and \u000d\u000aelectric vehicles \u2014 all of which require \u000d\u000aclean energy to operate.\u000d\u000aThe promotion of clean energy is an \u000d\u000aattempt to change the energy crisis into \u000d\u000aan opportunity, say industry observers.\u000d\u000aF i n a n c e M i n i s t e r E k n i t i \u000d\u000aNitithanprapas said Thailand needs to \u000d\u000afocus more on new investments in \u000d\u000arenewable energy infrastructure, \u000d\u000anotably microgrids, as it navigates \u000d\u000athrough the post-energy crisis.\u000d\u000aA microgrid is a small, self-contained \u000d\u000aelectricity network suitable for neighbourhoods, with local solar panels, wind \u000d\u000aturbines or batteries that supply electricity directly to nearby homes and \u000d\u000abuildings. \u000d\u000aSELF-GENERATED POWER\u000d\u000aHouseholds are also encouraged to \u000d\u000aproduce their own electricity by installing rooftop solar panels, which can earn \u000d\u000arevenue by selling excess power to the \u000d\u000astate grid.\u000d\u000aSolar power is becoming more \u000d\u000apopular thanks to government incentives to make solar panels more affordable, facilitating people who want to \u000d\u000areduce dependence on the state grid.\u000d\u000aThe government offers two schemes \u000d\u000athat are gaining interest as households \u000d\u000aseek ways to avoid expensive power \u000d\u000aprices caused by LNG price spikes as a \u000d\u000aresult of the Middle East war.\u000d\u000aRising electricity prices are a major concern during the energy crisis.\u000d\u000aRooftop solar panels are \u000d\u000abecoming more popular as \u000d\u000ahouseholds seek relief from \u000d\u000apricey power bills.\u000d\u000aOne scheme offers tax cuts of up to \u000d\u000a200,000 baht for homeowners who \u000d\u000ainstall rooftop solar panels between \u000d\u000aMarch 3 and Dec 31, 2026. The incentive \u000d\u000ais available for up to 90,000 households.\u000d\u000aAnother policy promotes rooftop \u000d\u000asolar installation and allows households \u000d\u000ato sell surplus electricity back to the \u000d\u000agovernment.\u000d\u000aMs Rachada said even those who are \u000d\u000anot eligible for discounted power bills \u000d\u000acan participate in this scheme.\u000d\u000aPeople consuming more than 200 \u000d\u000aunits of electricity a month may benefit \u000d\u000afrom rooftop solar, she said. If they \u000d\u000aproduce excess electricity, they can sell \u000d\u000apower to the state grid at 2.2 baht a unit \u000d\u000afor a period of 10 years.\u000d\u000aThe government set a target to purchase up to 500 megawatts of solar \u000d\u000apower from households, with sales \u000d\u000acapped at 5 kilowatts per meter.\u000d\u000aLow-interest financing will be made \u000d\u000aavailable for households to generate \u000d\u000atheir own electricity, said Ms Rachada.\u000d\u000aThe government initiated this scheme \u000d\u000ain 2024, aiming to buy a total of 90MW \u000d\u000afrom people. Interest in solar power \u000d\u000atrade was robust, with more than 10,000 \u000d\u000aapplicants that year and approved \u000d\u000acapacity reaching 89.8MW.\u000d\u000aDemand quickly exceeded the quota, \u000d\u000aprompting authorities to close applications in September 2024.\u000d\u000a12 MID-YEAR ECONOMIC REVIEW 2026","The current energy crisis may be \u000d\u000aThailand\u2019s last opportunity to \u000d\u000aadjust course and upgrade the \u000d\u000acountry\u2019s development, preventing the Thai economy from being \u000d\u000atrapped in a perpetual state of crisis.\u000d\u000aOver the past decade, Thailand\u2019s \u000d\u000aeconomy has repeatedly been battered \u000d\u000aby a series of crises, from the Covid-19 \u000d\u000apandemic in 2020, which caused a 6.1% \u000d\u000acontraction, the deepest in 25 years, to \u000d\u000athe Russia-Ukraine war in 2022 and, \u000d\u000amost recently, the war in Iran that triggered an energy shock.\u000d\u000aAccording to the IMD World \u000d\u000aCompetitiveness Centre\u2019s 2025 report, \u000d\u000aThailand\u2019s competitiveness ranking fell \u000d\u000ato 30th out of 69 economies worldwide, \u000d\u000adown from 25th in 2024. Competitiveness \u000d\u000adeclined in all segments: economic performance dropped to eighth from fifth; \u000d\u000abusiness efficiency dipped to 24th from \u000d\u000a20th; government efficiency decreased \u000d\u000ato 32nd from 24th; and infrastructure \u000d\u000aslipped to 47th from 43rd.\u000d\u000aIn recent years, the country has \u000d\u000alacked the investment to strengthen its \u000d\u000acompetitiveness. Prior to the 1997 economic crisis, total investment in \u000d\u000aThailand accounted for as much as 40% \u000d\u000aof GDP, but the figure has declined to \u000d\u000aonly 20%.\u000d\u000aThailand also faces the challenges of \u000d\u000aa new global order. Finance Minister \u000d\u000aEkniti Nitithanprapas said the country \u000d\u000amust prepare to adapt by investing in new \u000d\u000ainfrastructure, upgrading technology, \u000d\u000aand developing human capital to keep \u000d\u000apace with emerging technologies, \u000d\u000aparticularly artificial intelligence.\u000d\u000aLAND BRIDGE\u000d\u000aThe Land Bridge project, with an investment value estimated at 1 trillion baht, \u000d\u000ais back in the spotlight after being \u000d\u000apushed by the Prayut Chan-o-cha \u000d\u000aadministration, as well as Srettha \u000d\u000aThavisin and Paetongtarn Shinawatra, \u000d\u000aaiming to position Thailand as a \u201cglobal \u000d\u000agateway\u201d for logistics and shipping.\u000d\u000aThe Bhumjaithai Party-led government is promoting the project, with \u000d\u000aPrime Minister Anutin Charnvirakul \u000d\u000aappointing the finance minister in May \u000d\u000ato lead a government committee tasked \u000d\u000awith studying the proposed project over \u000d\u000aa 90 day period.\u000d\u000aAuthorities expect 3 major infrastructure initiatives this year\u000d\u000ato propel the economy, WRITES WICHIT CHANTANUSORNSIRI\u000d\u000aThe updated project reflects shifting \u000d\u000ageopolitical dynamics and is intended \u000d\u000ato align Thailand\u2019s infrastructure \u000d\u000astrategy with current global realities.\u000d\u000aThe Land Bridge aims to leverage \u000d\u000aThailand\u2019s strategic location as a hub in \u000d\u000aSoutheast Asia by shortening travel \u000d\u000aroutes between the Gulf of Thailand \u000d\u000a(connected to the Pacific Ocean) and \u000d\u000athe Andaman Sea (connected to the \u000d\u000aIndian Ocean), bypassing the Strait of \u000d\u000aMalacca and reducing travel distance by \u000d\u000aaround 8,000 kilometres.\u000d\u000aKey investments include the construction of deep-sea ports on both \u000d\u000acoasts: at Laem Riu in Lang Suan district, Chumphon province, and in Laem \u000d\u000aAo Ang in Ranong province. Each port \u000d\u000ais expected to handle up to 20 million \u000d\u000atwenty-foot equivalent units.\u000d\u000aThe project also includes a 90-kilometre transport corridor connecting the \u000d\u000atwo coasts, featuring a six-lane motorway, two metre-gauge lines and two \u000d\u000astandard-gauge lines.\u000d\u000aThe Land Bridge is expected to drive \u000d\u000adevelopment in the Southern Economic \u000d\u000aCorridor, supporting light industries \u000d\u000asuch as next-generation automotive \u000d\u000aelectronics assembly, food processing, \u000d\u000alogistics, and distribution centres, while \u000d\u000apromoting land use in the region.\u000d\u000aThe draft Southern Economic \u000d\u000aCorridor Act is meant to support the \u000d\u000aproject and is expected to be submitted \u000d\u000ato the cabinet in the third quarter this \u000d\u000ayear. If approved, the bill would proceed \u000d\u000afor parliamentary consideration, with \u000d\u000aconstruction targeted to begin in 2030.\u000d\u000aAIRPORT RAIL\u000d\u000aAnother infrastructure project is the \u000d\u000ahigh-speed rail linking Suvarnabhumi, \u000d\u000aLAST CHANCE FOR REBOOT\u000d\u000aIF WE DO NOT MAKE \u000d\u000aCHANGES, A FISCAL \u000d\u000aCRISIS MAY RESULT \u000d\u000aFROM SUBSIDISING \u000d\u000aENERGY PRICES AS \u000d\u000aEVERY COUNTRY HAS \u000d\u000aLIMITED FINANCIAL \u000d\u000aRESOURCES.\u000d\u000aEKNITI NITITHANPRAPAS,\u000d\u000aFINANCE MINISTER\u000d\u000aAn artist\u2019s interpretation of a \u000d\u000adeep-sea port as part of the Land \u000d\u000aBridge project proposed by the \u000d\u000aPheu Thai-led government.\u000d\u000aINFRASTRUCTURE\u000d\u000aDon Mueang and U-tapao airports. The \u000d\u000aCharoen Pokphand (CP)-led consortium, which won the bid in 2019, has yet \u000d\u000ato begin construction due to requests to \u000d\u000aamend key terms of the concession contract.\u000d\u000aThe consortium cited impacts from \u000d\u000athe pandemic and the Russia-Ukraine \u000d\u000awar that altered projected passenger \u000d\u000anumbers.\u000d\u000aCP Group proposed amending the \u000d\u000aconcession agreement, with the government providing construction subsidies \u000d\u000abased on completed work milestones.\u000d\u000aUnder the existing agreement, the \u000d\u000astate is required to make the payments \u000d\u000aonly after the project is completed \u000d\u000awithin five years, with disbursements \u000d\u000aspread over a 10-year period. Transport \u000d\u000aMinister Phiphat Ratchakitprakarn \u000d\u000arecently confirmed there will be no \u000d\u000achanges to the concession contract, \u000d\u000aadding that if CP opts to terminate the \u000d\u000aagreement, the project will be reopened \u000d\u000afor bidding.\u000d\u000aThe project is expected to utilise a \u000d\u000astandard-gauge track of 1.435 metres, \u000d\u000acovering a total distance of 220km.\u000d\u000aThe maximum speed is 250km per \u000d\u000ahour on the Suvarnabhumi-U-tapao \u000d\u000aairport section, and 160 km/h on the \u000d\u000aSuvarnabhumi-Don Mueang portion. \u000d\u000aThe total investment value of the project \u000d\u000ais 224 billion baht.\u000d\u000aDIRECT PPA\u000d\u000aMr Ekniti, who oversees the government\u2019s economic policy, said the government will also push forward the Direct \u000d\u000aPPA (power purchase agreement) \u000d\u000ascheme, allowing renewable energy producers (such as solar and wind) to sell \u000d\u000aelectricity directly to consumers (such \u000d\u000aas data centres and factories) without \u000d\u000agoing through the electricity authority \u000d\u000aas an intermediary. This should enable \u000d\u000along-term fixed pricing for clean energy, \u000d\u000awhich is in demand among modern \u000d\u000aindustries such as data centres.\u000d\u000aIn addition, he said the government \u000d\u000aplans to promote greater public adoption of solar cells.\u000d\u000a\u201cThailand is the largest energy \u000d\u000aimporter in Southeast Asia, accounting \u000d\u000afor as much as 10% of GDP,\u201d Mr Ekniti \u000d\u000asaid.\u000d\u000a\u201cIf we do not make changes, a fiscal \u000d\u000acrisis may result from subsidising energy \u000d\u000aprices as every country has limited \u000d\u000afinancial resources.\u201d\u000d\u000aHe said energy prices are unlikely to \u000d\u000adecline rapidly if the conflicts subside \u000d\u000aas much of the energy infrastructure \u000d\u000asuch as refineries and oil storage facilities in Iran have been heavily damaged.\u000d\u000aMeanwhile, the Transport Ministry is \u000d\u000apreparing to gradually propose around \u000d\u000a20 infrastructure investment projects \u000d\u000aworth hundreds of billions of baht for \u000d\u000acabinet approval, most of which will be \u000d\u000astructured as public-private partnerships. These include the Chalong Rat \u000d\u000aExpressway-Outer Ring Road (eastern \u000d\u000asection) project worth 13.6 billion baht, \u000d\u000athe second-level elevated expressway \u000d\u000a(Double Deck) from Ngam Wong Wan \u000d\u000ato Rama IX Road worth 34.8 billion baht, \u000d\u000aand the M8 motorway (Nakhon PathomPak Tho) worth 54.5 billion baht.\u000d\u000aMID-YEAR ECONOMIC REVIEW 2026 13","The telecom sector is expected \u000d\u000ato remain resilient this year \u000d\u000aamid economic challenges, \u000d\u000aattributed to a significant cost \u000d\u000adecline for operators related to spectrum and network roaming fees, as well \u000d\u000aas the sector\u2019s ample room for growth.\u000d\u000aPisut Ngamvijitwongs, senior equity \u000d\u000aresearch analyst at Kasikorn Securities \u000d\u000a(KS), said the brokerage downgraded its \u000d\u000arevenue growth projection for the \u000d\u000atelecom industry from 3-5% growth to \u000d\u000a1-3%, attributed to lower spending on \u000d\u000amobile phone service by the prepaid \u000d\u000acustomer segment, which constitutes \u000d\u000aroughly 65-70% of the market.\u000d\u000aAs daily wage earners and low-income groups face tighter budgets, they \u000d\u000aare cutting their mobile top-ups and \u000d\u000ausage, according to KS.\u000d\u000aConversely, spending by the postpaid \u000d\u000asegment, which comprises mediumto high-income earners, remains stable, \u000d\u000asaid Mr Pisut.\u000d\u000aDespite lower projected sector spending, reduced costs for operators and\u000d\u000adata demand drive hardy outlook, WRITES KOMSAN TORTERMVASANA\u000d\u000aThe decline in tourism has a limited \u000d\u000aimpact on the telecom sector, as \u000d\u000atourist-related income accounts for \u000d\u000aonly 5% of total mobile phone service \u000d\u000arevenue.\u000d\u000aDespite the projected revenue dip, \u000d\u000aAdvanced Info Service (AIS) is expected \u000d\u000ato record a profit increase of 10-15% this \u000d\u000ayear, while True Corporation could post \u000d\u000aprofit growth as high as 40-50%.\u000d\u000aThe main reason for the profit growth \u000d\u000ais the companies do not have to pay \u000d\u000aspectrum and network roaming fees to \u000d\u000astate enterprise National Telecom \u000d\u000aanymore under partnership deals, \u000d\u000awhich expired last year.\u000d\u000aMr Pisut said electricity accounts for \u000d\u000aroughly 10% of total expenses for both \u000d\u000aTrue and AIS.\u000d\u000aALTERNATIVE ENERGY\u000d\u000aSuphachai Chearavanont, senior \u000d\u000avice-chairman of Charoen Pokphand \u000d\u000aGroup, said the group, which includes \u000d\u000aTrue, has a long-term strategy to manage \u000d\u000aand mitigate energy costs.\u000d\u000aThe approach accelerates adoption \u000d\u000aof renewable energy, with solar power \u000d\u000acurrently accounting for 70-80% of the \u000d\u000agroup\u2019s total energy consumption.\u000d\u000a\u201cThis has cushioned us against volatile global oil prices to a certain extent,\u201d \u000d\u000ahe said.\u000d\u000aHowever, should the Mideast war \u000d\u000apersist and continue to drive up energy \u000d\u000acosts, the group plans to diversify its \u000d\u000ainvestments into alternative energy \u000d\u000asources, including wind power, energy \u000d\u000astorage systems and broader energy efficiency solutions, said Mr Suphachai.\u000d\u000aThe shift towards clean energy is a \u000d\u000acritical strategy for businesses navigating an increasingly uncertain global \u000d\u000aenergy landscape, he noted.\u000d\u000aTELECOM MAINTAINS STEADY COURSE\u000d\u000aTHAILAND IS IN A \u000d\u000aHIGH-GROWTH PHASE \u000d\u000aWITH A SIGNIFICANT \u000d\u000aRUNWAY LEFT FOR \u000d\u000aEXPANSION.\u000d\u000aPRATTHANA LEELAPANANG,\u000d\u000aCHIEF EXECUTIVE,\u000d\u000aADVANCED INFO SERVICE\u000d\u000aTELECOMMUNICATIONS\u000d\u000aThe telecom sector is expected \u000d\u000ato remain resilient this year \u000d\u000adespite economic challenges.\u000d\u000aMr Pratthana says market competition \u000d\u000ahas become more rational, with less \u000d\u000aprice-cutting.\u000d\u000aMr Suphachai says CP group has a \u000d\u000along-term strategy to manage\u000d\u000aenergy costs.\u000d\u000aU-SHAPED RECOVERY\u000d\u000aPratthana Leelapanang, chief executive \u000d\u000aof AIS, said the telecom industry last \u000d\u000ayear experienced a sharp rebound, with \u000d\u000adata usage growing by 15% and showing \u000d\u000asigns of continued growth.\u000d\u000aWhile data volume is expected to \u000d\u000aincrease by 10-15% annually, pricing \u000d\u000amay not grow at the same rate, he said.\u000d\u000aGrowth is evident in both mobile \u000d\u000aphone and broadband internet services, \u000d\u000adriven by users switching from 4G to 5G \u000d\u000aservice, which naturally leads to \u000d\u000aincreased data consumption, said Mr \u000d\u000aPratthana.\u000d\u000aHome broadband internet service is \u000d\u000aalso registering substantial growth, \u000d\u000aaccording to AIS.\u000d\u000aFurthermore, market competition has \u000d\u000abecome more rational, moving away \u000d\u000afrom aggressive price-cutting to focus \u000d\u000aon appropriate value-based sales, he \u000d\u000anoted.\u000d\u000aThe market sits slightly above \u000d\u000apre-pandemic levels, with more rational \u000d\u000amarket competition and continued \u000d\u000agrowth driven by artificial intelligence \u000d\u000a(AI).\u000d\u000aContinued investment is a key factor \u000d\u000afor the industry\u2019s positive performance, \u000d\u000aallowing for improved service offerings, \u000d\u000asaid Mr Pratthana.\u000d\u000a\u201cThailand is in a high-growth phase \u000d\u000awith a significant runway left for expansion,\u201d he said.\u000d\u000aThailand\u2019s 5G penetration rate is 37%, \u000d\u000acompared with 70-100% in other countries. The broadband penetration rate is \u000d\u000a50%, with ample growth room for data \u000d\u000acentres, cloud and AI services, said Mr \u000d\u000aPratthana.\u000d\u000aIn terms of energy costs driven by the \u000d\u000aMiddle East conflict, he said the operating expenses of data centres and AI \u000d\u000acosts are unavoidable and high, particularly for energy.\u000d\u000aAIS has leveraged AI to manage \u000d\u000aenergy and may need to intensify these \u000d\u000aefforts, noted Mr Pratthana.\u000d\u000aThe impact of the war in the Middle \u000d\u000aEast has not fully materialised because \u000d\u000athe conflict is ongoing, he said.\u000d\u000aTHREE SCENARIOS\u000d\u000aThe war will have a limited impact on \u000d\u000aThailand\u2019s digital economy if it ends by \u000d\u000aJune, according to the National Board of \u000d\u000athe Digital Economy and Society Office.\u000d\u000aWetang Phuangsup, secretary-general \u000d\u000aof the board, said it developed three \u000d\u000ascenarios for the energy impact of the \u000d\u000awar.\u000d\u000aIf the war ends in June, with the \u000d\u000aMiddle East\u2019s energy infrastructure \u000d\u000aexperiencing limited damage and the \u000d\u000aStrait of Hormuz recording a short-term \u000d\u000aimpact from the conflict, the Dubai \u000d\u000acrude oil price would average US$85-95 \u000d\u000aper barrel, costing the Thai digital \u000d\u000aeconomy 20 billion baht, a decline of \u000d\u000a0.3% of the estimated digital economy \u000d\u000avalue in 2026.\u000d\u000aIf the war ends around September, \u000d\u000aresulting in a prolonged impact to the \u000d\u000aHormuz Strait and greater damage to \u000d\u000athe Middle East energy infrastructure, \u000d\u000aDubai crude would average $105-115 \u000d\u000aper barrel and the digital economy is \u000d\u000aprojected to decline by 1.2% or by 87 \u000d\u000abillion baht, according to the board.\u000d\u000aThe worst-case scenario sees the war \u000d\u000aending at year-end, with severe damage \u000d\u000ato the energy infrastructure. In this case \u000d\u000aDubai crude would average $135-145 \u000d\u000aper barrel, costing the digital economy \u000d\u000a2.1% or a total of 144 billion baht, noted \u000d\u000athe panel.\u000d\u000a14 MID-YEAR ECONOMIC REVIEW 2026","","Thailand\u2019s property market \u000d\u000aentered 2026 expecting a \u000d\u000agradual recovery after a difficult year. Instead, fresh geopolitical tensions involving the US, \u000d\u000aIsrael and Iran have created another \u000d\u000alayer of uncertainty, clouding the \u000d\u000aoutlook for the sector during the first \u000d\u000ahalf.\u000d\u000aThe war has pushed global oil prices \u000d\u000ahigher, increasing transport and energy \u000d\u000acosts across industries. For Thailand\u2019s \u000d\u000aconstruction and property sectors, the \u000d\u000aimpact is filtering through supply \u000d\u000achains, construction materials and consumer purchasing power.\u000d\u000aRISING COSTS, FRAGILE DEMAND\u000d\u000aAccording to Siam Commercial Bank \u000d\u000aEconomic Intelligence Center (EIC), \u000d\u000adevelopers, contractors and construction material producers are being forced \u000d\u000ato adjust strategies and strengthen resilience as energy volatility drives up \u000d\u000aoperating costs.\u000d\u000aEnergy-intensive construction materials such as steel, cement and tiles are \u000d\u000aparticularly vulnerable, as energy \u000d\u000aaccounts for 35-50% of total production \u000d\u000acosts in these categories.\u000d\u000aThai real estate was dealt a body blow by conflict in the Middle East, with costs rising and\u000d\u000aconfidence evaporating both at home and abroad, WRITES KANANA KATHARANGSIPORN\u000d\u000aHigher oil prices have also increased \u000d\u000alogistics expenses and imported raw \u000d\u000amaterial costs, while uncertainty surrounding the Strait of Hormuz remains \u000d\u000aa significant risk factor for global commodity markets.\u000d\u000aAlthough construction material \u000d\u000aprices have so far risen only moderately, \u000d\u000apartly because many operators still hold \u000d\u000ainventory accumulated before the conflict, prolonged instability could trigger \u000d\u000asharper cost increases later this year.\u000d\u000aAs of March 11, billet prices in China \u000d\u000ahad already increased 6% from February \u000d\u000alevels, reflecting growing pressure on \u000d\u000aglobal material markets.\u000d\u000aRising living expenses also weakened \u000d\u000ahousehold purchasing power, particularly among middle- to lower-income \u000d\u000agroups, while business sentiment \u000d\u000aremains cautious amid concerns over \u000d\u000athe global economy.\u000d\u000aAgainst this backdrop, Thailand\u2019s \u000d\u000aproperty market is signalling diverging \u000d\u000atrends across sectors, with residential \u000d\u000aremaining the most vulnerable, industrial continuing to benefit from longterm structural demand, and office \u000d\u000agradually moving towards equilibrium \u000d\u000aafter years of aggressive competition.\u000d\u000aWAR SCUPPERS PROPERTY HOPES FOR 2026\u000d\u000aDEVELOPERS \u000d\u000aARE FOCUSING \u000d\u000aON CAREFULLY \u000d\u000aSELECTED SEGMENTS \u000d\u000aINSTEAD OF BROADBASED LAUNCHES. \u000d\u000aNEW CONDO \u000d\u000aPROJECTS ARE \u000d\u000aFROM DEVELOPERS \u000d\u000aCONFIDENT ABOUT \u000d\u000aSALES.\u000d\u000aSURACHET KONGCHEEP,\u000d\u000aHEAD OF RESEARCH, CUSHMAN & \u000d\u000aWAKEFIELD THAILAND\u000d\u000aPROPERTY\u000d\u000aGeopolitical tensions in the Gulf have created another layer of uncertainty for property sector. Photo: Kornchanok Raksaseri\u000d\u000aRECOVERY DELAYED\u000d\u000aThe residential market remains under \u000d\u000athe greatest pressure, simultaneously \u000d\u000afacing weaker purchasing power, \u000d\u000aslowing foreign demand and rising \u000d\u000adevelopment costs.\u000d\u000aThe EIC said higher energy prices \u000d\u000awere adding pressure to household \u000d\u000aexpenses, constraining housing demand \u000d\u000aamong middle- and lower-income \u000d\u000abuyers already burdened by high debt \u000d\u000alevels and tighter mortgage approvals.\u000d\u000aThe sector was initially expected to \u000d\u000arecover in 2026 after last year\u2019s downturn. However, the geopolitical conflict \u000d\u000ahas weakened sentiment further, delaying recovery prospects.\u000d\u000aDevelopers are also grappling with \u000d\u000arising construction costs and have \u000d\u000alimited ability to raise sales prices due \u000d\u000ato weak demand and intense market \u000d\u000acompetition.\u000d\u000aThe think tank forecasts new residential launches in Greater Bangkok will \u000d\u000atotal around 39,000 units in 2026, down \u000d\u000a5% year-on-year, marking a fourth consecutive annual decline.\u000d\u000aIf geopolitical tensions persist, new \u000d\u000alaunches could fall as much as 10% as \u000d\u000adevelopers delay projects to preserve \u000d\u000a16 MID-YEAR ECONOMIC REVIEW 2026","The closure of the Strait \u000d\u000aof Hormuz is pressuring \u000d\u000aconstruction material prices. \u000d\u000aPhoto: Nattapol Lovakij\u000d\u000aliquidity and reduce risk exposure, \u000d\u000anoted EIC.\u000d\u000aCondos remain particularly vulnerable to economic uncertainty, despite \u000d\u000adevelopers continuing to launch selected \u000d\u000aprojects backed by construction contracts signed before material costs \u000d\u000aincreased.\u000d\u000aSurachet Kongcheep, head of \u000d\u000aresearch at property consultancy \u000d\u000aCushman & Wakefield Thailand, said \u000d\u000adevelopers are focusing on carefully \u000d\u000aselected segments instead of broadbased launches.\u000d\u000a\u201cNew condo projects are from developers confident about sales,\u201d he said.\u000d\u000aIn the first quarter of 2026, new condo \u000d\u000asupply dropped sharply to 7,170 units, \u000d\u000acompared with more than 20,000 units \u000d\u000aper quarter during stronger market \u000d\u000aperiods.\u000d\u000aExcluding a single 4,000-unit launch \u000d\u000aby BTS Group\u2019s Baan Chao-Thai project, \u000d\u000atotal new supply would have fallen \u000d\u000abelow 3,000 units.\u000d\u000aDevelopers have shifted towards \u000d\u000amore affordable suburban projects, \u000d\u000acausing the average selling price of new \u000d\u000alaunches to decline to around 84,500 \u000d\u000abaht per square metre, down 55% from \u000d\u000athe previous quarter.\u000d\u000aDespite rising costs, condo prices are \u000d\u000aunlikely to increase significantly in the \u000d\u000anear term as developers prioritise sales \u000d\u000avolume over margins, said Mr Surachet.\u000d\u000aConstruction materials account for \u000d\u000a25-30% of total project costs, meaning a \u000d\u000a10-20% increase in material prices \u000d\u000awould raise overall costs by only 2.5-6%.\u000d\u000aHowever, profit margins may narrow \u000d\u000aif energy prices remain elevated for an \u000d\u000aextended period, noted the consultancy.\u000d\u000aOBSTACLES\u000d\u000aMortgage rejection rates remain another \u000d\u000aobstacle, exceeding 50-60% as financial \u000d\u000ainstitutions maintain strict lending criteria.\u000d\u000aGovernment stimulus measures, \u000d\u000aincluding transfer and mortgage fee \u000d\u000areductions for homes priced less than 7 \u000d\u000amillion baht and relaxed loan-to-value \u000d\u000arules, have yet to produce a meaningful \u000d\u000arebound in demand.\u000d\u000aForeign demand continues to offer \u000d\u000asome support, particularly among \u000d\u000abuyers seeking overseas residences or \u000d\u000aasset diversification.\u000d\u000aHowever, demand from Middle \u000d\u000aEastern buyers affected by the war \u000d\u000aremains limited, accounting for only 1% \u000d\u000aof the total value of foreign condo transfers.\u000d\u000aSome developers are now targeting \u000d\u000awealthy overseas buyers through longstay visa programmes linked to condo \u000d\u000apurchases worth at least 3 million baht.\u000d\u000aThe scheme targets retirees, investors \u000d\u000aand digital nomads seeking extended \u000d\u000astays in destinations such as Bangkok, \u000d\u000aPhuket, Pattaya and Chiang Mai.\u000d\u000aThe EIC said developers should \u000d\u000aincreasingly adapt business models to \u000d\u000asuit weaker domestic affordability, \u000d\u000aincluding rental and rent-to-own \u000d\u000aschemes.\u000d\u000a\u201cWe will help contractors procure \u000d\u000amaterials directly and absorb the \u000d\u000adifference if they face higher material \u000d\u000acosts driven by fuel prices,\u201d said Prateep \u000d\u000aTangmatitham, president of SET-listed \u000d\u000adeveloper Supalai.\u000d\u000aSupalai is also prioritising prompt \u000d\u000acontractor payments and focusing \u000d\u000adevelopment in existing locations to \u000d\u000areduce relocation costs and improve \u000d\u000aoperational efficiency.\u000d\u000aOther developers are adopting \u000d\u000asimilar strategies, including securing \u000d\u000adiscounted construction materials from \u000d\u000adelayed projects originally ordered by \u000d\u000alarger operators.\u000d\u000aSOLID INDUSTRIAL OUTLOOK\u000d\u000aUnlike the residential market, the \u000d\u000aindustrial sector continues to benefit \u000d\u000afrom long-term investment demand, \u000d\u000adespite growing cost pressures and \u000d\u000amarket volatility.\u000d\u000aDemand for industrial estates, warehouses and ready-built factories \u000d\u000aremained strong during the first two \u000d\u000amonths of 2026, according to Cushman \u000d\u000a& Wakefield Thailand. However, rising \u000d\u000asupply from second-hand industrial \u000d\u000aland is limiting price growth.\u000d\u000aThe consultancy said many Chinese \u000d\u000ainvestors who purchased industrial land \u000d\u000aduring the recent boom are now reselling plots after failing to comply with \u000d\u000aregulations or operate businesses as \u000d\u000aintended.\u000d\u000a\u201cWhen the market surged, this \u000d\u000asegment entered without fully understanding regulations,\u201d said Phongphan \u000d\u000aPhloiphet, director of logistics and \u000d\u000aindustrial at Cushman & Wakefield \u000d\u000aThailand.\u000d\u000aAfter authorities tightened inspections late last year, many investors found \u000d\u000athey could no longer operate or lease \u000d\u000atheir properties legally, which increased \u000d\u000asecondary-market land supply in industrial areas such as Chon Buri and \u000d\u000aRayong, pushing down prices.\u000d\u000aIn the first quarter of 2026, the average \u000d\u000aasking price for logistics and industrial \u000d\u000aland nationwide remained flat at 8.3 \u000d\u000amillion baht per rai.\u000d\u000aPrices in Chon Buri, Rayong and \u000d\u000aLaem Chabang remained unchanged at \u000d\u000a9.5 million baht, 7.5 million baht and \u000d\u000a6.25 million baht per rai, respectively. \u000d\u000aSecond-hand plots are typically being \u000d\u000aoffered at discounts of 10-15% below \u000d\u000amarket rates.\u000d\u000aMr Phongphan said the additional \u000d\u000asupply could continue affecting prices \u000d\u000afor at least two more quarters.\u000d\u000aEven so, investor interest remains \u000d\u000aresilient, particularly among Middle \u000d\u000aEastern groups exploring opportunities \u000d\u000ain Thailand following regional \u000d\u000ainstability.\u000d\u000a\u201cMost are interested in data centre \u000d\u000ainvestments, while some are exploring \u000d\u000aopportunities in the petrochemical \u000d\u000asector,\u201d he said.\u000d\u000aThailand continues to hold an advantage over regional peers due to stronger \u000d\u000ainfrastructure and utilities, particularly \u000d\u000afor large-scale industrial operations, \u000d\u000anoted the consultancy.\u000d\u000aOFFICE MARKET REBALANCES\u000d\u000aBangkok\u2019s office market is gradually \u000d\u000amoving towards a more balanced phase \u000d\u000aafter years of aggressive supply growth \u000d\u000aand intense competition.\u000d\u000aOlder office buildings in the central \u000d\u000abusiness district (CBD) are accelerating \u000d\u000arenovations or exploring alternative uses \u000d\u000aafter losing major tenants to newer \u000d\u000aGrade A towers.\u000d\u000aSome buildings are even considering \u000d\u000aconverting into hotels after large financial sector tenants announced plans to \u000d\u000arelocate to modern offices with larger \u000d\u000acontiguous floor plates.\u000d\u000aAukit Pronpattanapairoj, head of \u000d\u000aoffice leasing at Cushman & Wakefield \u000d\u000aThailand, said tenant preferences are \u000d\u000ashifting beyond rental rates alone.\u000d\u000a\u201cThe relocation of major tenants is \u000d\u000anot driven solely by newer buildings or \u000d\u000amore attractive rents, but also by the \u000d\u000aneed for more contiguous floor plates,\u201d \u000d\u000ahe said.\u000d\u000aOne notable refurbishment project is \u000d\u000aAbdulrahim Place, a 30-year-old office \u000d\u000atower on Rama IV Road undergoing \u000d\u000amajor renovation after losing a key \u000d\u000atenant.\u000d\u000aThe Bangkok office market recorded \u000d\u000a154,500 sq m of new supply in the first \u000d\u000aquarter of 2026, all located outside the \u000d\u000aCBD.\u000d\u000aGrade A vacancy rates edged down \u000d\u000aslightly to 23.3% from 23.8% in the fourth \u000d\u000aquarter of 2025. However, substantial \u000d\u000afuture supply remains a concern, with \u000d\u000a575,310 sq m scheduled for completion \u000d\u000abetween 2026 and 2031.\u000d\u000aOf that amount, 62.5% or 359,310 sq m \u000d\u000ais Grade A office space in the CBD.\u000d\u000aMr Aukit said the sharp slowdown in \u000d\u000anew completions during 2025 reduced \u000d\u000apressure on the market. New office \u000d\u000asupply in 2025 tallied only 101,000 sq m, \u000d\u000adown 84% from 615,400 sq m in 2024.\u000d\u000a\u201cThe drop in new supply is positive \u000d\u000afor the market, easing pressure from new \u000d\u000abuildings,\u201d he said.\u000d\u000aAverage Grade A rents remained \u000d\u000astable at 943 baht per sq m per month \u000d\u000ain the first quarter.\u000d\u000aAlthough competition has moderated, \u000d\u000atenants continue to hold bargaining \u000d\u000apower, particularly in buildings with \u000d\u000ahigh vacancy rates or recently departed \u000d\u000aanchor tenants.\u000d\u000aLooking ahead, the office market is \u000d\u000aexpected to gradually stabilise, \u000d\u000asupported by slower supply growth and \u000d\u000aimproving occupancy.\u000d\u000aHowever, global economic conditions \u000d\u000awill continue to shape leasing decisions \u000d\u000aand corporate expansion plans throughout the remainder of the year.\u000d\u000aMID-YEAR ECONOMIC REVIEW 2026 17","Thailand\u2019s banking industry is \u000d\u000aexpected to maintain strict risk \u000d\u000amanagement for the remainder \u000d\u000aof the year as uncertainty surrounding the war in the Middle East \u000d\u000aweighs on the global economy, while \u000d\u000alocal economic growth remains under \u000d\u000apressure from longstanding structural \u000d\u000achallenges.\u000d\u000aRISK MANAGEMENT\u000d\u000aKattiya Indaravijaya, chief executive of \u000d\u000aKasikornbank (KBank), said it is maintaining a cautious approach to risk management amid global uncertainty, particularly from the prolonged conflicts in \u000d\u000athe Middle East.\u000d\u000aKBank, the country\u2019s third-largest \u000d\u000alender by total assets, is monitoring \u000d\u000aclients with exposure to the Middle East \u000d\u000athrough case-by-case assessments and \u000d\u000adirect engagement with affected customers. However, the bank\u2019s exposure \u000d\u000ato the region remains limited, she said.\u000d\u000aKBank maintained prudent credit \u000d\u000acost management, setting aside 9.8 \u000d\u000abillion baht in loan-loss provisions for \u000d\u000athe first quarter of 2026. Expected credit \u000d\u000alosses (ECL) are projected to remain at \u000d\u000aaround 10 billion baht per quarter \u000d\u000athroughout the year.\u000d\u000aA combination of slowing loan growth, rising credit risks and an uncertain economic environment \u000d\u000awill test the resilience of the sector the rest of the year, WRITES SOMRUEDI BANCHONGDUANG\u000d\u000a\u201cWe shifted our lending strategy \u000d\u000atowards existing customers with proven \u000d\u000atrack records and emphasised secured \u000d\u000alending. With this approach, the bank \u000d\u000adoes not need to set aside massive \u000d\u000areserves as it did during the pandemic \u000d\u000aperiod in 2022-2023,\u201d Mrs Kattiya said.\u000d\u000aThe bank\u2019s asset quality remains \u000d\u000astable, with the gross non-performing \u000d\u000aloan (NPL) ratio at 3.19%, while the \u000d\u000abank\u2019s capital adequacy ratio under \u000d\u000aBasel III was a strong 20% as of March \u000d\u000a31. Although inflows of new NPLs have \u000d\u000aslowed, the bank continues to monitor \u000d\u000arisks and proactively engage with vulnerable customer segments, she said.\u000d\u000aDespite KBank reporting solid \u000d\u000afirst-quarter results in 2026, Mrs Kattiya \u000d\u000asaid the earnings have yet to fully reflect \u000d\u000athe impact of the Middle East war, which \u000d\u000aintensified at the end of the quarter. \u000d\u000aWith the conflict expected to persist, \u000d\u000aeconomic uncertainty is likely to \u000d\u000aincrease and could weigh on future \u000d\u000aoperating performance.\u000d\u000aKBank posted the industry\u2019s highest \u000d\u000afirst-quarter net profit at 14.7 billion \u000d\u000abaht, up 6.35% year-on-year.\u000d\u000a\u201cLooking ahead, there is some \u000d\u000aconcern about how the next nine \u000d\u000amonths will unfold,\u201d she said.\u000d\u000aBANKS PREPARE FOR CHALLENGES\u000d\u000aWE ARE MONITORING \u000d\u000aTHE CONFLICTS \u000d\u000aAND STAND \u000d\u000aREADY TO ASSIST \u000d\u000aCUSTOMERS, WHILE \u000d\u000aALSO SUPPORTING \u000d\u000aGOVERNMENT \u000d\u000aAND REGULATORY \u000d\u000aMEASURES TO \u000d\u000aSTIMULATE THE \u000d\u000aECONOMY.\u000d\u000aKATTIYA INDARAVIJAYA,\u000d\u000aCHIEF EXECUTIVE, KBANK\u000d\u000aBANKING\u000d\u000aNon-interest income is playing a growing role in supporting earnings for Thai banks, partly offsetting the decline in net interest income.\u000d\u000aGiven heightened geopolitical risks, \u000d\u000aKBank reaffirmed its commitment to its \u000d\u000a\u201c3+1\u201d strategic framework, alongside \u000d\u000aongoing efforts to improve operational \u000d\u000aefficiency and maintain disciplined cost \u000d\u000amanagement.\u000d\u000aThe bank also emphasised an \u000d\u000aapproach meant to better understand \u000d\u000aclient needs and provide comprehensive \u000d\u000asupport during the uncertainty, said Mrs \u000d\u000aKattiya.\u000d\u000a\u201cWe are monitoring the conflicts and \u000d\u000astand ready to assist customers, while \u000d\u000aalso supporting government and regulatory measures to stimulate the \u000d\u000aeconomy,\u201d she said.\u000d\u000aKBank expressed concern over \u000d\u000aThailand\u2019s economic outlook for the \u000d\u000aremainder of the year, particularly the \u000d\u000astructural issues that continue to constrain growth.\u000d\u000aKa s i ko r n Re s e a rc h C e nt e r \u000d\u000a(K-Research) forecasts economic \u000d\u000agrowth of 0.8-1.2% this year, with the \u000d\u000aoutlook heavily dependent on \u000d\u000adevelopments in the Middle East war. \u000d\u000aThailand continues to face structural \u000d\u000achallenges, especially high debt levels \u000d\u000afor households, the government and \u000d\u000acorporations, which together exceed \u000d\u000a250% of GDP.\u000d\u000a18 MID-YEAR ECONOMIC REVIEW 2026","Mrs Kattiya says KBank shifted its \u000d\u000alending strategy towards existing \u000d\u000acustomers with proven track records and \u000d\u000aemphasised secured lending.\u000d\u000aMr Chaiyarit says BBL\u2019s business \u000d\u000adiversification should allow it to \u000d\u000amaintain profitability while managing \u000d\u000arisks appropriately.\u000d\u000aThe country\u2019s economic growth has \u000d\u000aremained below 3% for several \u000d\u000aconsecutive years.\u000d\u000aMrs Kattiya urged the government to \u000d\u000aprioritise investment in high-potential \u000d\u000aindustries aligned with national development strategies and the Reinvent \u000d\u000aThailand initiative, such as medical and \u000d\u000awellness services and the automotive \u000d\u000asector, while also accelerating efforts to \u000d\u000adiversify export markets.\u000d\u000aDIVERSIFICATION KEY\u000d\u000aChaiyarit Anuchitworawong, senior \u000d\u000aexecutive vice-president at Bangkok \u000d\u000aBank (BBL), agreed banking operations \u000d\u000afor the remainder of the year would continue to face significant challenges due \u000d\u000ato the prolonged war in the Middle East. \u000d\u000aAs a result, diversification of both risks \u000d\u000aand business opportunities is increasingly important, he noted.\u000d\u000aBBL, Thailand\u2019s largest lender by total \u000d\u000aassets, has the country\u2019s largest international banking network, with operations \u000d\u000ain nine of the 10 Asean economies, \u000d\u000aexcluding Brunei. International banking \u000d\u000aaccounts for around 25% of both the \u000d\u000abank\u2019s loan portfolio and total revenue.\u000d\u000aAlthough international banking \u000d\u000aoperations continue to support growth, \u000d\u000aBBL has no plans to aggressively expand \u000d\u000athe segment, as the bank remains \u000d\u000afocused on maintaining appropriate risk \u000d\u000acontrols.\u000d\u000aMr Chaiyarit said the war has affected \u000d\u000abusiness operations across the region, \u000d\u000aparticularly through rising energy costs. \u000d\u000aThe impact on the bank\u2019s clients has \u000d\u000avaried depending on customer segment, \u000d\u000aindustry and country.\u000d\u000aFor individual and small and mediumsized enterprise (SME) customers, \u000d\u000aoperations in Thailand and Indonesia \u000d\u000ahave been relatively more affected, as \u000d\u000athe bank offers retail and SME banking \u000d\u000aservices in only these two countries.\u000d\u000aThailand has been more heavily \u000d\u000aaffected by rising energy costs, while \u000d\u000aIndonesia faced higher inflation. \u000d\u000aHowever, Indonesia also benefited from \u000d\u000arising oil prices as an oil-exporting \u000d\u000acountry.\u000d\u000a\u201cGiven our business diversification, \u000d\u000awe expect to maintain profitability while \u000d\u000amanaging risks appropriately,\u201d he said.\u000d\u000aIdentifying new business opportunities is another priority to sustain longterm growth, noted Mr Chaiyarit. The \u000d\u000abank continues to maintain sufficient \u000d\u000aloan-loss provisions to cope with \u000d\u000aheightened uncertainties, challenges \u000d\u000aand potential shocks.\u000d\u000aBBL maintains a strong capital base \u000d\u000ato prepare for business opportunities in \u000d\u000athe future, he said.\u000d\u000aAs of March 31, BBL\u2019s common equity \u000d\u000atier 1 capital adequacy ratio was 16.4%, \u000d\u000awhile its total capital adequacy ratio was \u000d\u000a20.9%, both above the Bank of Thailand\u2019s \u000d\u000aminimum requirements. The bank\u2019s \u000d\u000aallowance for ECLs to NPLs remained \u000d\u000astrong at 318%, according to its financial \u000d\u000astatements submitted to the Stock \u000d\u000aExchange of Thailand.\u000d\u000aSTABLE CORE EARNINGS\u000d\u000aAccording to K-Research, the commercial banking sector posted combined net \u000d\u000aprofits of 66.7 billion baht in the first \u000d\u000aquarter of 2026, broadly unchanged \u000d\u000ayear-on-year, reflecting banks\u2019 ability to \u000d\u000asustain earnings at stable levels.\u000d\u000aHowever, profitability was not driven \u000d\u000aprimarily by core lending activities. \u000d\u000aInstead, non-interest income (non-II) \u000d\u000aplayed a key role in supporting earnings, \u000d\u000apartly offsetting the decline in net \u000d\u000ainterest income (NII), the banking \u000d\u000asector\u2019s main source of revenue.\u000d\u000aKey contributors included net fees \u000d\u000aand service income, dividend income \u000d\u000aand gains from financial instruments \u000d\u000ameasured at fair value through profit or \u000d\u000aloss. Additional support came from contributions by the Financial Institutions \u000d\u000aDevelopment Fund under debt relief \u000d\u000ameasures.\u000d\u000aMeanwhile, the industry\u2019s NII \u000d\u000acontinued to decline from sluggish loan \u000d\u000agrowth and lower lending rates, in line \u000d\u000awith the central bank\u2019s accommodative \u000d\u000amonetary policy.\u000d\u000a\u201cThe sector\u2019s ability to navigate the \u000d\u000afirst quarter should be viewed as an \u000d\u000ainitial step rather than a sign of sustained \u000d\u000arecovery, as economic uncertainty and \u000d\u000astructural vulnerabilities among \u000d\u000aborrowers are likely to place further \u000d\u000apressure on bank performance in the \u000d\u000aperiods ahead,\u201d K-Research stated.\u000d\u000aThailand\u2019s banking sector faces a \u000d\u000amore uncertain outlook for the \u000d\u000aremainder of 2026, as the growing \u000d\u000areliance on non-II signals increasing \u000d\u000achallenges for core banking operations. \u000d\u000aThe income structure of commercial \u000d\u000abanks is gradually shifting, reflecting \u000d\u000amounting pressure on traditional \u000d\u000alending businesses, noted the think \u000d\u000atank.\u000d\u000aThis trend suggests operating conditions are likely to become more challenging in the second quarter and \u000d\u000athroughout the second half of the year, \u000d\u000ain line with a riskier and more volatile \u000d\u000aeconomic environment, said \u000d\u000aK-Research.\u000d\u000aThe main challenge is risk management of loan portfolios, covering both \u000d\u000anew lending and asset quality. Banks \u000d\u000aare expected to remain cautious in \u000d\u000aextending credit, ensuring lending is \u000d\u000aaligned with borrowers\u2019 repayment \u000d\u000acapacity, while continuing to provide \u000d\u000aliquidity support, especially to SMEs, \u000d\u000athrough targeted assistance programmes.\u000d\u000aAsset quality remains a persistent \u000d\u000aconcern. The ratio of NPLs edged higher \u000d\u000ain the first quarter, while economic constraints could pressure the income and \u000d\u000acash flow of vulnerable borrowers, \u000d\u000aincluding retail customers and SMEs, \u000d\u000anoted the research house.\u000d\u000aK-Research forecasts total bank \u000d\u000alending to contract for a third consecutive year in 2026, based on the financial \u000d\u000astatements of nine banks. The sector\u2019s \u000d\u000aNPL ratio is expected to exceed 3.2% of \u000d\u000atotal loans.\u000d\u000aAnother issue is provisioning, as \u000d\u000abanks are expected to maintain a \u000d\u000aprudent approach by setting aside additional reserves to cushion against economic volatility and rising risks, following early signs from first-quarter \u000d\u000afinancial results that indicate continued \u000d\u000acaution in managing credit costs, \u000d\u000aaccording to the think tank.\u000d\u000aK-Research anticipates the combination of slowing loan growth, rising credit \u000d\u000arisks and an uncertain macroeconomic \u000d\u000abackdrop will test the resilience of the \u000d\u000abanking sector throughout the remainBanks say they are trying to better understand client needs to assist them during this volatile period. Photo: Wisuttipong Rodpai der of the year.\u000d\u000aMID-YEAR ECONOMIC REVIEW 2026 19","The prolonged conflicts in the \u000d\u000aMiddle East that caused uncertainty about energy supplies \u000d\u000aand rising global inflation are \u000d\u000aweighing on Thailand\u2019s insurance industry, exacerbating unfavourable conditions that have dragged on since 2025, \u000d\u000ainsurers say.\u000d\u000aThomas Wilson, president and chief \u000d\u000aexecutive of Allianz Ayudhya Assurance, \u000d\u000asaid the Thai life insurance industry performed \u201creasonably well\u201d last year, with \u000d\u000acompanies strong in agency health sales \u000d\u000abenefiting from higher demand in the \u000d\u000afirst quarter as the industry moved to \u000d\u000acontingent co-pay health insurance, \u000d\u000aspurring record sales increases before \u000d\u000athe switch in late March 2025.\u000d\u000aHowever, the remainder of the year \u000d\u000awas weaker due to a front-loading of \u000d\u000ahealth insurance purchases combined \u000d\u000awith a weaker economy and lower consumer confidence caused by uncertain \u000d\u000aglobal tariffs, the conflict along the \u000d\u000aCambodian border, political uncertainty \u000d\u000adue to the snap election in February \u000d\u000a2026, and the impact of flooding in \u000d\u000asouthern Thailand.\u000d\u000aDownbeat economy weakens several segments, but there is opportunity for the government\u000d\u000ato shore up protection gaps, WRITES NAREERAT WIRIYAPONG\u000d\u000aThese factors negatively influenced \u000d\u000athe growth of the property and casualty \u000d\u000ainsurance market last year, though rates \u000d\u000afirmed in the property segment somewhat following the March earthquake \u000d\u000aand fourth-quarter flooding in the \u000d\u000aSouth, with natural catastrophes having \u000d\u000aan adverse impact on claims, he told the \u000d\u000aBangkok Post. \u000d\u000aAccording to the Thai Life Assurance \u000d\u000aAssociation (TLAA), gross written premiums (GWP) in the Thai life insurance \u000d\u000amarket grew 3.45% last year as new business premiums gained 3.6%. The property and casualty segment, according \u000d\u000ato the Thai General Insurance \u000d\u000aAssociation (TGIA), grew GWP by 2.3%.\u000d\u000a\u201cThese factors continue to negatively \u000d\u000aaffect consumer and corporate confidence this year, exacerbated by the conflict in the Middle East, uncertainty \u000d\u000aabout energy supplies and the potential \u000d\u000afor higher inflation combined with lower \u000d\u000atourism and exports,\u201d noted Mr Wilson.\u000d\u000aThese factors also resulted in GDP \u000d\u000agrowth estimates for 2026 to tally only \u000d\u000a1.3-1.8%, the lowest in five years, negatively affecting insurance sales, he said.\u000d\u000aINSURANCE OUTLOOK GLUM GIVEN WAR BACKDROP\u000d\u000aWE ENCOURAGE \u000d\u000aRELEVANT AGENCIES \u000d\u000aTO ADDRESS \u000d\u000aCURRENT EV PRICING \u000d\u000aCHALLENGES, \u000d\u000aWHERE INSURANCE \u000d\u000aPOLICIES ARE BEING \u000d\u000aSOLD AT A LOSS \u000d\u000aUNDER SIGNIFICANT \u000d\u000aPRESSURE FROM \u000d\u000aCHINESE PRODUCERS.\u000d\u000aGUILLAUME MIRABAUD,\u000d\u000aCHIEF EXECUTIVE,\u000d\u000aAXA INSURANCE THAILAND\u000d\u000aINSURANCE\u000d\u000aNatural disasters last year, \u000d\u000aincluding flooding in Hat Yai, had \u000d\u000aan adverse impact on insurance \u000d\u000aclaims. Photo: Weerapong Narongkul\u000d\u000a Continued on page 22\u000d\u000aThe TLAA reported in February that \u000d\u000ayear-to-date GWP grew 3.8% and new \u000d\u000abusiness growth was only 2.2%.\u000d\u000a\u201cDepending on the resolution of the \u000d\u000aMiddle East conflict, it is likely the life \u000d\u000ainsurance growth rate will be at the \u000d\u000alower end of the TLAA\u2019s 2.5-3.5% estimate, similar to the property and casualty insurance market at the lower range \u000d\u000aof the TGIA\u2019s forecast of 2.5-3.5% \u000d\u000agrowth,\u201d said Mr Wilson.\u000d\u000aLESS DRIVING AND TRAVEL\u000d\u000aThe Iran war has prompted people to drive \u000d\u000aand travel less, lowering the frequency of \u000d\u000aauto and travel insurance claims as most \u000d\u000atravel insurance excludes losses from war. \u000d\u000aSome speciality lines such as trade credit \u000d\u000aand political insurance have recorded \u000d\u000arising demand, he noted.\u000d\u000a\u201cHowever, these slight positives have \u000d\u000abeen more than offset by lower consumer \u000d\u000aand corporate confidence, negatively \u000d\u000aaffecting expenditures on new automobiles and homes, investments in new \u000d\u000aplants and equipment, long-term retirement savings and health insurance commitments,\u201d said Mr Wilson.\u000d\u000a20 MID-YEAR ECONOMIC REVIEW 2026",""," Continued from page 20\u000d\u000aINSURANCE\u000d\u000aWhile interest in business interruption \u000d\u000arisk has increased, several considerations \u000d\u000ahave dampened new business growth. \u000d\u000aStandard business interruption policies \u000d\u000acover damage to physical property and \u000d\u000aexclude war damage, reducing its appeal \u000d\u000ain the current crisis, he said.\u000d\u000aMoreover, the appropriate time to buy \u000d\u000athis insurance is before an event occurs, \u000d\u000awith insurance premiums adjusting \u000d\u000arapidly to the changing risk profile and \u000d\u000aeconomic environment, noted Mr \u000d\u000aWilson. \u000d\u000aMarine, cargo and aviation insurance \u000d\u000apremiums have increased to reflect the \u000d\u000ahigher risk profile to international trade \u000d\u000acaused by the conflict.\u000d\u000aProperty premiums are likely to \u000d\u000aincrease if inflation escalates or the baht \u000d\u000adepreciates, increasing the cost of \u000d\u000areplacement parts, he said.\u000d\u000aUPGRADE NEEDED\u000d\u000aGuillaume Mirabaud, chief executive of \u000d\u000aAXA Insurance Thailand, said the \u000d\u000ainsurance outlook is hazy as GDP \u000d\u000aprojections are downgraded and \u000d\u000auncertainties mount.\u000d\u000aHe said Thailand needs to address a \u000d\u000agrowing need for natural catastrophe \u000d\u000acoverage, especially floods.\u000d\u000aIn terms of motor insurance, there is \u000d\u000agrowing demand for electric vehicles \u000d\u000a(EVs), but it remains unclear how much \u000d\u000acapacity is available to serve demand.\u000d\u000a\u201cThe insurance industry would greatly \u000d\u000abenefit from upgraded and modernised \u000d\u000aregulations, unlocking the industry\u2019s full \u000d\u000agrowth potential,\u201d Mr Mirabaud told the \u000d\u000aBangkok Post.\u000d\u000aAXA encourages relevant agencies to \u000d\u000aaddress current EV pricing challenges, \u000d\u000awhere insurance policies are being sold \u000d\u000aat a loss under significant pressure from \u000d\u000aChinese producers, he said.\u000d\u000a\u201cA more sustainable and level playing \u000d\u000afield would benefit the industry and \u000d\u000aconsumers alike,\u201d said Mr Mirabaud.\u000d\u000aOn health insurance, the company \u000d\u000arecommends authorities encourage the \u000d\u000adevelopment of new products including \u000d\u000aco-payment structures and clearer \u000d\u000aguidelines on medical cost reimbursements so that health insurance becomes \u000d\u000amore affordable and accessible to more \u000d\u000aThais.\u000d\u000a\u201cInsurance penetration in Thailand \u000d\u000arelative to GDP remains low, but the \u000d\u000apotential for growth is significant. \u000d\u000aAligning with best practices from \u000d\u000amarkets such as Singapore, Malaysia \u000d\u000aand Hong Kong would make a real difference. AXA Thailand is more than \u000d\u000aready to work alongside the TGIA and \u000d\u000athe authorities to make this happen,\u201d he \u000d\u000asaid.\u000d\u000aPROTECTION GAPS\u000d\u000aMr Wilson said Thailand has several \u000d\u000acritical insurance protection gaps, \u000d\u000adefined as segments where there is a \u000d\u000alarge difference between the amount of \u000d\u000ainsurance that is economically beneficial \u000d\u000aand the amount of coverage actually \u000d\u000apurchased.\u000d\u000aThe most critical gap the Thai government should address is the gap in private \u000d\u000aretirement savings via insurance, which \u000d\u000acould lead to a higher burden for the \u000d\u000aadministration given the ageing Thai \u000d\u000ademographic, he said.\u000d\u000a\u201cThe Thai government can help close \u000d\u000athis gap through increased financial \u000d\u000aeducation and tax incentives for longterm savings,\u201d said Mr Wilson.\u000d\u000aMr Mirabaud says \u000d\u000athe insurance \u000d\u000aindustry would \u000d\u000agreatly benefit \u000d\u000afrom upgraded \u000d\u000aand modernised \u000d\u000aregulations.\u000d\u000aThai life \u000d\u000ainsurance \u000d\u000agrowth this year \u000d\u000ais likely to be \u000d\u000alimited by the \u000d\u000aMiddle East war, \u000d\u000asays Mr Wilson.\u000d\u000aAnother gap is in sustainable private \u000d\u000ahealth insurance coverage, potentially \u000d\u000aleading to an unsustainable government \u000d\u000aburden, again due to the ageing Thai \u000d\u000asociety. While the Office of the Insurance \u000d\u000aCommission is promoting affordable \u000d\u000aprivate coverage that is in addition to \u000d\u000athe social security foundation, for the \u000d\u000alonger term he said the threat is doubledigit medical claims inflation.\u000d\u000aThe government can address this \u000d\u000along-term issue by aligning consumer \u000d\u000aand payer incentives, such as mandatory \u000d\u000aco-payment terms and aligning the \u000d\u000ainterests of providers, consumers and \u000d\u000apayers by supporting firmer definitions \u000d\u000aof medical necessity and the pricing of \u000d\u000apharmaceuticals, noted Mr Wilson.\u000d\u000aFinally, there is a gap in natural \u000d\u000acatastrophe coverage for earthquakes \u000d\u000aand floods, especially for the most vulnerable elements of society.\u000d\u000aAccording to Swiss Re\u2019s latest sigma \u000d\u000areport, natural catastrophe risks in Asia \u000d\u000aare becoming more interconnected. For \u000d\u000aexample, the Myanmar earthquake last \u000d\u000ayear led to around US$11 billion in economic losses, with impacts felt across the \u000d\u000aregion, including Bangkok, where insured \u000d\u000alosses were estimated at $1.5 billion.\u000d\u000aFloods remain a key driver of risk. A \u000d\u000aweather pattern across Thailand, \u000d\u000aIndonesia and Malaysia last November \u000d\u000ato December led to at least $11 billion \u000d\u000ain losses, as compounding monsoon \u000d\u000aand cyclone rainfall increased the scale \u000d\u000aof impact.\u000d\u000aExposure is also rising, with Thailand\u2019s \u000d\u000abuilt-up area growing by 43% over the \u000d\u000apast two decades, much of it in floodprone zones.\u000d\u000a\u201cThe Thai government can help to \u000d\u000aclose the gap directly by continuing to \u000d\u000ainvest in flood control or prevention, \u000d\u000alessening the frequency and severity of \u000d\u000afuture events,\u201d said Mr Wilson.\u000d\u000a\u201cThere may be a possibility to structure a public-private arrangement to \u000d\u000asupport affordable natural catastrophe \u000d\u000acoverage for the most vulnerable.\u201d\u000d\u000a22 MID-YEAR ECONOMIC REVIEW 2026","The escalation of geopolitical \u000d\u000atensions in the Middle East has \u000d\u000asent shockwaves across global \u000d\u000afinancial markets, challenging \u000d\u000along-held assumptions and reshaping \u000d\u000aasset allocation strategies worldwide.\u000d\u000aFrom equities and bonds to gold and \u000d\u000adigital assets, the conflict triggered a \u000d\u000asynchronised repricing of risk, driven \u000d\u000aprimarily by surging energy prices, persistent inflation and tightening financial \u000d\u000aconditions.\u000d\u000aFor Thailand, an economy deeply \u000d\u000aintegrated into global trade and heavily \u000d\u000areliant on energy imports, the impact has \u000d\u000abeen both immediate and multifaceted. \u000d\u000aAmid the turbulence, analysts said the \u000d\u000aThai capital market has demonstrated \u000d\u000aresilience, supported by institutional \u000d\u000asafeguards, adaptive policy responses \u000d\u000aand evolving investor strategies.\u000d\u000aBLACK SWAN SHOCK\u000d\u000aThe Thai equity market was among the \u000d\u000afirst to react to the geopolitical shock. \u000d\u000aAccording to Asadej Kongsiri, president \u000d\u000aof the Stock Exchange of Thailand (SET), \u000d\u000athe Middle East war represents a classic \u000d\u000a\u201cBlack Swan\u201d event, a concept populaWar in the Middle East and an energy price shock left Thai markets\u000d\u000ain a sorry state, with investors praying for geopolitical serenity\u000d\u000ain the second half, WRITES NUNTAWUN POLKUAMDEE \u000d\u000arised by Nassim Nicholas Taleb meaning \u000d\u000aunexpected, severe and capable of triggering systemic volatility.\u000d\u000aAt the height of the panic in early \u000d\u000aMarch, the Thai index fell by more than \u000d\u000a100 points, or roughly 8% intraday, mirroring a global equity sell-off. The rout \u000d\u000awas fuelled by a rapid surge in oil prices, \u000d\u000arising inflation expectations, and fears \u000d\u000athat central banks would delay interest \u000d\u000arate cuts.\u000d\u000aThailand\u2019s vulnerability is acute as the \u000d\u000acountry imports around half of its crude \u000d\u000aoil and roughly 20% of its liquefied \u000d\u000anatural gas from the Middle East. Any \u000d\u000adisruption to key supply routes, such as \u000d\u000athe Strait of Hormuz, amplifies \u000d\u000ainflationary pressure and raises \u000d\u000aproduction costs across industries.\u000d\u000aDespite the volatility, the market \u000d\u000ainfrastructure held firm. The SET \u000d\u000adeployed circuit breakers to halt trading \u000d\u000atemporarily when losses breached 8% \u000d\u000ato prevent panic selling. Additional \u000d\u000asafeguards such as price limits, dynamic \u000d\u000abands and auto-pause mechanisms \u000d\u000ahelped stabilise stocks, while regulators \u000d\u000aintensified surveillance of trading \u000d\u000aactivity across all investor segments.\u000d\u000aBATTERED MARKETS HOPE\u000d\u000aFOR CALMER H2 THE LOCAL BOND \u000d\u000aMARKET\u2019S UNDERPERFORMANCE \u000d\u000aREFLECTS A \u000d\u000aCONFLUENCE OF \u000d\u000aVULNERABILITIES. \u000d\u000aTHAILAND FACES \u000d\u000aHEIGHTENED \u000d\u000aSTAGFLATION RISKS \u000d\u000aWHEN ENERGY \u000d\u000aPRICES RISE, AND \u000d\u000aCAPITAL OUTFLOWS \u000d\u000aACCELERATED AS \u000d\u000aINVESTORS SHIFT \u000d\u000aTO THE US DOLLAR, \u000d\u000aWEAKENING THE BAHT \u000d\u000aAND PRESSURING BOND \u000d\u000aPRICES. CONCERNS \u000d\u000aOVER FISCAL STABILITY \u000d\u000aDRIVEN BY RISING \u000d\u000aSUBSIDY COSTS PUSHED \u000d\u000aYIELDS INTO THE\u000d\u000a2.5-2.8% RANGE.\u000d\u000aARIYA TIRANAPRAKIJ,\u000d\u000aPRESIDENT, THAI BOND\u000d\u000aMARKET ASSOCIATION\u000d\u000aThe performance of Bitcoin was nuanced \u000d\u000aduring the conflict, initially falling more \u000d\u000athan 9% before rebounding strongly.\u000d\u000aDespite short-term turbulence, Mr \u000d\u000aAsadej said Thailand\u2019s market \u000d\u000afundamentals remain intact. The \u000d\u000aexchange continues to function as a \u000d\u000a\u201cseamless infrastructure\u201d, ensuring \u000d\u000auninterrupted trading even during \u000d\u000aperiods of extreme stress, a marked \u000d\u000aimprovement from past crises.\u000d\u000aThe war created a clear divergence \u000d\u000aacross sectors. Energy and upstream \u000d\u000apetrochemical companies, such as \u000d\u000aPTT Exploration and Production Plc \u000d\u000aand PTT Plc, have benefited directly \u000d\u000afrom higher crude prices and \u000d\u000aimproved refining margins. \u000d\u000aAgricultural and food producers also \u000d\u000agained from rising commodity prices, \u000d\u000awhile infrastructure and telecom \u000d\u000aplayers continue to attract foreign \u000d\u000adirect investment and maintain stable \u000d\u000aearnings.\u000d\u000aConversely, sectors sensitive to \u000d\u000aenergy costs and consumer demand \u000d\u000ahave come under pressure. Small \u000d\u000apower producers face margin \u000d\u000acompression from rising gas prices, \u000d\u000awhile airlines and tourism operators \u000d\u000astruggle with higher fuel costs and \u000d\u000aweakened travel sentiment.\u000d\u000aSTOCKS\u000d\u000aMID-YEAR ECONOMIC REVIEW 202623","STOCKS\u000d\u000aRetail and consumer sectors are grappling with declining purchasing power, \u000d\u000awhile the mid- to low-income segment \u000d\u000aof real estate has slowed sharply due to \u000d\u000ahigher living costs.\u000d\u000aAt a broader level, listed companies \u000d\u000amust contend with the structural risks \u000d\u000aof stagflation, currency volatility and \u000d\u000aelevated financing costs. However, \u000d\u000alessons from the pandemic have led to \u000d\u000astronger risk management frameworks, \u000d\u000aimproving corporate resilience from \u000d\u000aprevious shocks, noted Mr Asadej.\u000d\u000aBOND MARKET\u000d\u000aPerhaps the most striking development \u000d\u000ain 2026 has been the breakdown of \u000d\u000atraditional bond market dynamics. In \u000d\u000acontrast to historical patterns where \u000d\u000ainvestors flock to bonds during crises, \u000d\u000athe global fixed-income market has \u000d\u000aexperienced a sharp sell-off.\u000d\u000aThis \u201cliquidation shock\u201d was driven \u000d\u000aby an inflation surge, as Brent crude \u000d\u000aprices surged past US$120 per barrel \u000d\u000afollowing disruptions in the Gulf region. \u000d\u000aInvestors quickly repriced expectations, \u000d\u000aanticipating central banks, particularly \u000d\u000athe Federal Reserve, would keep rates \u000d\u000ahigher for longer.\u000d\u000aA broad-based sell-off across asset \u000d\u000aclasses forced investors to liquidate even \u000d\u000atraditionally defensive holdings to raise \u000d\u000acash. Adding to the pressure, governments worldwide increased borrowing \u000d\u000ato fund energy subsidies and defence \u000d\u000aspending, flooding markets with new \u000d\u000abond supply and pushing yields higher.\u000d\u000aAccording to the Thai Bond Market \u000d\u000aAssociation (ThaiBMA), the Thai market \u000d\u000awas hit harder than many regional peers. \u000d\u000aAs of April 2026, returns on 10-year Thai \u000d\u000agovernment bonds had fallen to -4.1%, \u000d\u000aranking among the worst globally.\u000d\u000aAriya Tiranaprakij, president of the \u000d\u000aThaiBMA, said this underperformance \u000d\u000areflects a confluence of vulnerabilities. \u000d\u000aAs a net oil importer, Thailand faces \u000d\u000aheightened stagflation risks when \u000d\u000aenergy prices rise. Capital outflows have \u000d\u000aaccelerated as investors shift to the US \u000d\u000adollar, weakening the baht and further \u000d\u000apressuring bond prices. Meanwhile, \u000d\u000aconcerns over fiscal stability, driven by \u000d\u000arising subsidy costs, have pushed yields \u000d\u000ainto the 2.5-2.8% range.\u000d\u000aThe stress has spilled over into the \u000d\u000acorporate bond market, marking a \u000d\u000aturning point. Default values surged by \u000d\u000a35% year-on-year, particularly among \u000d\u000asmaller issuers and non-rated bonds, \u000d\u000awith many firms resorting to debt \u000d\u000arescheduling.\u000d\u000aSome sectors have been exposed to \u000d\u000athe liquidity squeeze. Mid- to lower-tier \u000d\u000areal estate developers have been hardest \u000d\u000ahit, as weakened demand and high \u000d\u000ainterest rates limit their ability to refinance maturing debt.\u000d\u000aRenewable energy firms and small \u000d\u000apower producers face rising fuel costs, \u000d\u000aeroding margins and strained cash \u000d\u000aflows, especially for highly leveraged \u000d\u000acompanies. Construction materials \u000d\u000afirms are suffering from both a slowdown in property development and a \u000d\u000ashift in government spending towards \u000d\u000aenergy subsidies.\u000d\u000aAt the root of the crisis is a severe \u000d\u000aliquidity crunch. Investors have rotated \u000d\u000ato alternative safe havens such as gold, \u000d\u000awhile credit rating downgrades to \u000d\u000anon-investment grade have triggered \u000d\u000aforced selling by institutional funds.\u000d\u000aIn response, the ThaiBMA and the \u000d\u000aSecurities and Exchange Commission \u000d\u000ahave tightened disclosure requirements, \u000d\u000aparticularly around energy risk management and reserve funding, while monitoring leverage ratios. These measures \u000d\u000aaim to restore confidence and prevent \u000d\u000asystemic contagion.\u000d\u000aGOLD AND CRYPTO\u000d\u000aWhile bonds faltered, gold reaffirmed \u000d\u000aits role as the ultimate safe haven. Spot \u000d\u000agold prices surged to all-time highs \u000d\u000aduring the peak of the conflict, \u000d\u000asupported by strong demand as an \u000d\u000ainflation hedge and store of value.\u000d\u000aAnalysts at JPMorgan raised their \u000d\u000along-term price target to as high as \u000d\u000a$6,300 per ounce, citing prolonged geopolitical risk and structural weaknesses \u000d\u000ain fiat currencies.\u000d\u000aCentral banks have accelerated gold \u000d\u000aaccumulation, seeking to diversify \u000d\u000areserves away from the US dollar amid \u000d\u000arising geopolitical fragmentation.\u000d\u000aAccording to Thanalop Preedamanoch, \u000d\u000ahead of investment and fund manager \u000d\u000aat Merkle Capital, the performance of \u000d\u000acryptocurrencies has been more \u000d\u000anuanced. Bitcoin initially fell more than \u000d\u000a9% during the early phase of the conflict, \u000d\u000abehaving like a risk asset in line with \u000d\u000aglobal equities.\u000d\u000aHowever, as the situation stabilised \u000d\u000aBitcoin rebounded strongly, gaining \u000d\u000amore than 17% from its lows, highlighting its evolving role. For some investors, \u000d\u000ait represents a censorship-resistant \u000d\u000aasset, particularly relevant in scenarios \u000d\u000ainvolving financial system disruptions \u000d\u000aor capital controls, he noted.\u000d\u000aDecentralised finance platforms and \u000d\u000adecentralised exchanges have seen \u000d\u000aincreased adoption, as investors seek \u000d\u000aalternatives to centralised financial \u000d\u000ainfrastructure that may be vulnerable to \u000d\u000ageopolitical or cyber-risks.\u000d\u000aStill, regulatory uncertainty remains \u000d\u000aa key constraint. Market participants are \u000d\u000awatching developments such as the proposed Crypto Regulation and Investment \u000d\u000aTransparency Act in the US that could \u000d\u000aprovide greater clarity and support \u000d\u000abroader institutional adoption.\u000d\u000aTRANSITION TO RECOVERY\u000d\u000aAs oil prices begin to ease and peace \u000d\u000anegotiations emerge, the strategy is \u000d\u000ashifting to \u201cbuy on weakness\u201d.\u000d\u000aSectors that were previously under \u000d\u000apressure, such as retail and consumer \u000d\u000agoods, are expected to benefit from \u000d\u000aeasing inflation and recovering demand. \u000d\u000aTechnology and innovation-driven \u000d\u000aindustries, particularly those linked to \u000d\u000aartificial intelligence and digital infrastructure, are regaining investor attention as long-term growth drivers.\u000d\u000aHigh-quality bonds are also returning \u000d\u000ato portfolios, particularly with maturities \u000d\u000aof 2-5 years, allowing investors to lock \u000d\u000ain elevated yields before potential rate \u000d\u000acuts.\u000d\u000aThe tourism sector could rebound as \u000d\u000atravel confidence returns and airspace \u000d\u000arestrictions are lifted, according to analysts.\u000d\u000aAs the war shows signs of stabilisation, investment strategies are shifting \u000d\u000afrom defence to recovery.\u000d\u000aPiyasak Manason, head of economic \u000d\u000aresearch at InnovestX Securities, recommended a \u201cstay invested, stay selective\u201d \u000d\u000aapproach, favouring energy stocks as a \u000d\u000ahedge against oil prices, defensive \u000d\u000asectors with strong pricing power, and \u000d\u000agold as a geopolitical hedge. Exposure \u000d\u000ato global defence stocks also increased, \u000d\u000areflecting rising military spending.\u000d\u000aInvestors were advised to avoid \u000d\u000asectors heavily exposed to energy costs, \u000d\u000aincluding petrochemicals, airlines and \u000d\u000acertain healthcare segments reliant on \u000d\u000aMiddle Eastern demand.\u000d\u000aLooking ahead, the trajectory of the \u000d\u000aThai equity market will largely depend \u000d\u000aon the evolution of geopolitical risks, \u000d\u000anoted the brokerage.\u000d\u000aInnovestX said in a worst-case scenario \u000d\u000awhere the conflict escalates, the SET \u000d\u000aindex could fall to a range of 1,100-1,350 \u000d\u000apoints. The base case predicts \u000d\u000ade-escalation and economic recovery, \u000d\u000awith the bourse sideways around 1,500-\u000d\u000a1,530 points, supported by domestic \u000d\u000agrowth and improved political clarity.\u000d\u000aThe Middle East conflict fundamentally altered the investment landscape, \u000d\u000achallenging traditional safe havens. \u000d\u000aCorrelations between asset classes have \u000d\u000ashifted and liquidity has emerged as the \u000d\u000adefining factor in times of crisis, said the \u000d\u000abrokerage.\u000d\u000aFor Thailand, while external shocks \u000d\u000aremain unavoidable, stronger market \u000d\u000ainfrastructure, improved corporate risk \u000d\u000amanagement, and adaptive policy \u000d\u000aresponses are helping the country \u000d\u000anavigate an increasingly complex global \u000d\u000aenvironment.\u000d\u000aIn an era defined by geopolitical \u000d\u000auncertainty, flexibility and not tradition \u000d\u000ais key for investors preserving and \u000d\u000agrowing capital.\u000d\u000aMr Asadej says the Mideast war was a Black Swan event for the Thai equity market, \u000d\u000ameaning unexpected, severe and capable of triggering systemic volatility. \u000d\u000aPhoto: Varuth Hirunyatheb\u000d\u000aThe war resulted in gold \u000d\u000areaffirming its role as\u000d\u000athe ultimate safe haven.\u000d\u000aPhoto: Nutthawat Wichieanbut\u000d\u000a24 MID-YEAR ECONOMIC REVIEW 2026","","Tourism has been volatile and \u000d\u000adynamic this year, even though \u000d\u000atourism operators were hoping \u000d\u000afor a robust performance in the \u000d\u000afirst quarter after the industry was \u000d\u000aplagued by safety concerns in 2025.\u000d\u000aWith the new government led by \u000d\u000aPrime Minister Anutin Charnvirakul \u000d\u000ataking office, operators anticipated continued economic development plans \u000d\u000aand greater stability in the long run.\u000d\u000aHowever, those prospects were \u000d\u000aderailed as the industry was engulfed by \u000d\u000athe US-Iran war, which disrupted flights \u000d\u000aand slowed economic growth worldwide, fuelling a cost of living crisis.\u000d\u000aUNEVEN IMPACT\u000d\u000aChai Arunanondchai, president of the \u000d\u000aTourism Council of Thailand, said \u000d\u000aforward bookings for the low season and \u000d\u000athe upcoming high season seem to be \u000d\u000aworse than last year, which would affect \u000d\u000aoperators\u2019 income.\u000d\u000aHe said higher travel and living costs \u000d\u000ahave dampened foreign and domestic \u000d\u000atourism sentiment for the remainder of \u000d\u000athe year.\u000d\u000aAccording to the Tourism and Sports \u000d\u000aMinistry, inbound tourism fell by 2.43% \u000d\u000aThe Thai travel industry\u2019s great expectations for 2026 were blown apart in February by war in the\u000d\u000aMiddle East, resulting in soaring costs and fewer bookings, WRITES MOLPASORN SHOOWONG\u000d\u000ato 9.31 million arrivals in the first quarter \u000d\u000aof this year, recording 453 billion baht \u000d\u000ain revenue, a 1.93% decline year-onyear.\u000d\u000aSome market segments are continuing to visit Thailand, particularly \u000d\u000ahigh-spending travellers who can afford \u000d\u000aincreased airfares after airlines globally \u000d\u000ahiked fuel surcharges and reduced seat \u000d\u000acapacity.\u000d\u000aThis segment includes Middle Eastern \u000d\u000avisitors seeking to escape conflict zones \u000d\u000aand opting for longer stays in Thailand, \u000d\u000aas well as large short-haul markets such \u000d\u000aas China, choosing Thailand in part \u000d\u000abecause of the short travel distance, \u000d\u000anoted Mr Chai.\u000d\u000aAverage tourism spending remains at \u000d\u000aacceptable levels, despite fewer arrivals, \u000d\u000ahe said.\u000d\u000aTourism operators recorded uneven \u000d\u000agrowth, as occurred during the \u000d\u000apandemic, where accommodation able \u000d\u000ato target premium travellers such as fivestar hotels faced less of an impact than \u000d\u000athree-star hotels, attributed to the ability \u000d\u000ato maintain pricing, said Mr Chai.\u000d\u000aOperators have become stricter in \u000d\u000aexpense management, while expecting \u000d\u000alower margins across the board.\u000d\u000aTOURISM HOPES SHATTERED BY CONFLICT\u000d\u000aFORWARD BOOKINGS \u000d\u000aFOR THE LOW SEASON \u000d\u000aAND HIGH SEASON ARE \u000d\u000aWORSE THAN 2025, \u000d\u000aWHICH WILL AFFECT \u000d\u000aOPERATORS\u2019 INCOME. \u000d\u000aHIGHER TRAVEL AND \u000d\u000aLIVING COSTS HAVE \u000d\u000aDAMPENED FOREIGN \u000d\u000aAND DOMESTIC \u000d\u000aTOURISM SENTIMENT \u000d\u000aFOR THE REMAINDER OF \u000d\u000aTHE YEAR.\u000d\u000aCHAI ARUNANONDCHAI,\u000d\u000aPRESIDENT, TOURISM COUNCIL\u000d\u000aOF THAILAND\u000d\u000aTOURISM\u000d\u000aThe tourism industry has been disrupted by rising airfares as jet fuel prices skyrocket. Photo: Somchai Poomlard\u000d\u000aPROACTIVE MEASURES\u000d\u000a\u201cQuick-win measures that help businesses maintain their cash flow are more \u000d\u000acrucial for short-term recovery during \u000d\u000athis crisis, compared with long-term \u000d\u000ainvestment such as infrastructure, which \u000d\u000ashould also be maintained,\u201d he said.\u000d\u000aTourism operators view stimulus \u000d\u000ameasures as necessary during this difficult period, such as a domestic co-payment scheme, or subsidies for tour companies or for airline tickets.\u000d\u000aThanapol Cheewarattanaporn, \u000d\u000apresident of the Association of Thai \u000d\u000aTravel Agents, said the government \u000d\u000afailed to swiftly introduce tourism \u000d\u000astimulus, nor did it draft any long-term \u000d\u000adevelopment plan after the Middle East \u000d\u000aconflict erupted.\u000d\u000a\u201cGovernment stability is positive for \u000d\u000athe industry, but making swift decisions \u000d\u000aand close collaboration at the ministerial level are more crucial during this \u000d\u000acrisis,\u201d said Mr Thanapol.\u000d\u000aUnless there is effective tourism \u000d\u000astimulus, foreign arrivals in 2026 are \u000d\u000aunlikely to reach the 33 million recorded \u000d\u000alast year, he said.\u000d\u000aChinese arrivals could drop below 5 \u000d\u000amillion, which would offer little support \u000d\u000a26 MID-YEAR ECONOMIC REVIEW 2026","Only tourists with sufficient \u000d\u000apurchasing power are expected \u000d\u000ato visit Thailand during the low \u000d\u000aseason. Photo: Somchai Poomlard\u000d\u000aTourism operators want swifter \u000d\u000aaction from the government, \u000d\u000alaunching effective stimulus \u000d\u000acampaigns to maintain the flow \u000d\u000aof tourists as living costs balloon. \u000d\u000aPhoto: Nutthawat Wichieanbut\u000d\u000ato the market, although travel sentiment \u000d\u000aamong that market has improved from \u000d\u000alast year.\u000d\u000a\u201cDespite uncertainty over external \u000d\u000aconflicts, travel is still crucial for the \u000d\u000aeconomy, driving business and employment. Tourism operators must continue \u000d\u000atheir efforts to penetrate targeted segments that still have travel demand,\u201d said \u000d\u000aMr Thanapol.\u000d\u000aHe said the ability of tourism to \u000d\u000arebound depends on the effectiveness \u000d\u000aof measures, such as marketing roadshows and two-way tourism cooperation with destinations such as China, \u000d\u000aIndia, and Southeast Asian nations.\u000d\u000aThese short-haul markets have high \u000d\u000apotential to visit Thailand due to the \u000d\u000ashort distance, as travel costs are smaller \u000d\u000adue to lower airfares.\u000d\u000aReducing visa-free stays from 60 days \u000d\u000ato 30 days should address some ongoing \u000d\u000aproblems, but the government must \u000d\u000aclearly communicate to tourists the \u000d\u000apurpose is weeding out foreigners with \u000d\u000aillicit intentions, while Thailand still welcomes tourists as usual, noted Mr \u000d\u000aThanapol.\u000d\u000aThe administration should plan \u000d\u000aactivities and promotions for the yearend high season, as flights and demand \u000d\u000aare expected to pick up, though Thailand \u000d\u000awill be competing with other countries, \u000d\u000ahe said.\u000d\u000aAIRLINE BURDEN\u000d\u000aNuntaporn Komonsittivate, head of \u000d\u000acommercial at Thai Lion Air, said the \u000d\u000aaviation industry faces a tougher time \u000d\u000ain 2026 than last year due to the energy \u000d\u000acrisis and sluggish demand.\u000d\u000aShe said airlines need to prioritise \u000d\u000aoptimising their operations, managing \u000d\u000arevenue and expenses as the latter relies \u000d\u000aon uncontrollable external factors such \u000d\u000aas fuel prices.\u000d\u000aJet A1 fuel accounts for more than \u000d\u000a30% of airline expenses and has more \u000d\u000athan doubled in price since the US-Iran \u000d\u000aconflict erupted.\u000d\u000aThis spike caused airlines across the \u000d\u000aglobe to reduce seat capacity on routes \u000d\u000awith low demand that are not profitable \u000d\u000aor unable to cover operational costs.\u000d\u000aAirlines raised fuel surcharges in \u000d\u000aresponse to the price trend, pushing up \u000d\u000aairfares.\u000d\u000aMrs Nuntaporn said the aviation \u000d\u000asector previously expected the conflict \u000d\u000ato end within 1-2 months, but that prediction was incorrect.\u000d\u000a\u201cForecasting performance for the \u000d\u000awhole year is impractical as we have to \u000d\u000aadjust the plan on a monthly basis,\u201d she \u000d\u000asaid.\u000d\u000aThai Lion Air is focusing on shortterm measures, optimising its fleet and \u000d\u000anetwork to match the slowdown in travel \u000d\u000ademand as the low season approaches, \u000d\u000awith people postponing trips and \u000d\u000atightening their belts to deal with \u000d\u000aeconomic uncertainty.\u000d\u000aOne optimisation strategy typically \u000d\u000aapplied during low season is alloting \u000d\u000asome jets for maintenance.\u000d\u000aNormally the airline would assign 2-3 \u000d\u000aaircraft for maintenance during this \u000d\u000aperiod, out of 36 planes in the fleet. \u000d\u000aGiven the circumstances, Thai Lion Air \u000d\u000amay now assign more planes for maintenance, said Mrs Nuntaporn.\u000d\u000aFor May, the airline reduced flight \u000d\u000acapacity by 10%, with further cuts \u000d\u000alined up for June and July based on a \u000d\u000asignificant slowdown in forward bookings.\u000d\u000aThai Lion Air raised its fuel surcharge \u000d\u000aby 5-10%, depending on the route.\u000d\u000aShe said if the Middle East conflict \u000d\u000apersists, rates might be hiked again.\u000d\u000aThe airline also delayed its plan to \u000d\u000areceive five new planes, scheduled for \u000d\u000aearlier this year, to cope with the tourism \u000d\u000amarket slowdown.\u000d\u000aMID-YEAR ECONOMIC REVIEW 2026 27","I\u000d\u000antensifying geopolitical conflicts, \u000d\u000asupply chain fragmentation, and the \u000d\u000aartificial intelligence (AI) race to \u000d\u000areshape global trade have led tech \u000d\u000aleaders to call for Thailand to shift from \u000d\u000adigital consumption towards tech \u000d\u000asovereignty to strengthen economic \u000d\u000aresilience and competitiveness.\u000d\u000aThey said Thailand should leverage its \u000d\u000ageopolitical neutrality to build stronger \u000d\u000adigital infrastructure, develop local technology supply chains integrated into \u000d\u000aglobal value chains, and accelerate AI \u000d\u000atalent development, while enforcing \u000d\u000asmarter regulations that create domestic \u000d\u000avalue and turn global uncertainty into a \u000d\u000astrategic economic advantage.\u000d\u000aSupparat Sivapetchranat Singhara na \u000d\u000aAyutthaya, vice-chairman of the Thailand \u000d\u000aData Center Association, said the nation \u000d\u000ashould take advantage of the global \u000d\u000auncertainty arising from war in the \u000d\u000aMiddle East, potential tensions between \u000d\u000aChina and Japan, and the conflict involving Russia and Ukraine.\u000d\u000aThese conditions are likely to \u000d\u000aaccelerate capital flows into Southeast \u000d\u000aAsia, particularly from the US, China and \u000d\u000athe Middle East, as investors seek \u000d\u000apolitically stable and geographically \u000d\u000aneutral locations, he said.\u000d\u000aIn terms of data centres and graphics \u000d\u000aprocessing unit (GPU) deployment, the \u000d\u000akey Southeast Asian countries are \u000d\u000aThailand, Indonesia and Malaysia, Mr \u000d\u000aSupparat said.\u000d\u000aEnd customers are expected to seek \u000d\u000adeployment capacity of roughly 300-500 \u000d\u000amegawatts per country over the next \u000d\u000a12-18 months, he noted.\u000d\u000aPOWER HUNGRY\u000d\u000aThe Provincial Electricity Authority and \u000d\u000aElectricity Generating Authority of \u000d\u000aThailand must work together to issue \u000d\u000abankable power purchase agreements \u000d\u000a(PPAs) or power confirmation agreements to give end users, hyperscalers, \u000d\u000aGPU cloud operators, and data centre \u000d\u000aoperators confidence that power can be \u000d\u000asecured within a clear time frame, said \u000d\u000aMr Supparat.\u000d\u000aInvestment in computing and cloud infrastructure help to reshape the \u000d\u000acountry\u2019s role in the regional tech economy, WRITES SUCHIT LEESA-NGUANSUK\u000d\u000aThe Board of Investment reported \u000d\u000areceipt of applications to invest more \u000d\u000athan 1 trillion baht in digital infrastructure and data centres in Thailand in \u000d\u000arecent years.\u000d\u000aHowever, these investments are at risk \u000d\u000aif Thailand cannot provide timely and \u000d\u000acredible power confirmation to the data \u000d\u000acentre industry, he said.\u000d\u000aOnce PPAs are issued, Thailand should \u000d\u000amove beyond simply attracting foreign \u000d\u000adata centre investment, added Mr \u000d\u000aSupparat.\u000d\u000a\u201cThe government should build a Thai \u000d\u000adata centre supply chain, supported by \u000d\u000arelevant agencies, financial institutions \u000d\u000aand industrial policy,\u201d he noted.\u000d\u000aThai companies with confirmed \u000d\u000aoff-takers should receive financing and \u000d\u000asupport to manufacture or assemble key \u000d\u000aproducts required for data centre buildout, said Mr Supparat.\u000d\u000a\u201cThis would allow Thailand to move \u000d\u000afrom being an importer of data centre \u000d\u000aequipment to becoming a regional supplier. These Thai-made products could \u000d\u000afirst serve domestic projects, then be \u000d\u000aexported across the region,\u201d he said.\u000d\u000aThis form of data centre investment \u000d\u000awould not only increase foreign direct \u000d\u000ainvestment, but also create a broader \u000d\u000aGDP impact through local manufacturing, skilled employment, technology \u000d\u000atransfer and export growth.\u000d\u000aThailand has an opportunity to use the \u000d\u000aglobal shift in capital and computing \u000d\u000ademand to become a regional hub for \u000d\u000apower-backed AI infrastructure and the \u000d\u000aSoutheast Asian data centre supply chain, \u000d\u000anoted Mr Supparat.\u000d\u000aMorragot Kulatumyotin, president of \u000d\u000athe Thai Internet and Cloud Service \u000d\u000aProviders Association, said the uncertain \u000d\u000ageopolitical situation is a wake-up call \u000d\u000afor Thailand to achieve tech sovereignty, \u000d\u000aensuring tech resilience through local \u000d\u000adata centres, multiple connectivity, and \u000d\u000athe use of open source or locally \u000d\u000adeveloped applications and services.\u000d\u000a\u201cIf we rely on foreign tech, when there \u000d\u000aare sanctions or bans on the use of foreign \u000d\u000atechnology, or when tech firms change \u000d\u000alicensing or charging models, how can \u000d\u000awe bargain or manage business \u000d\u000acontinuity?\u201d asked Mrs Morragot. \u000d\u000aCOST OPTIMISATION\u000d\u000aAnoop Sagoo, chief executive of Accenture \u000d\u000aSoutheast Asia, said businesses must \u000d\u000afocus on becoming more cost-competitive to sustain growth, which requires \u000d\u000amodernising organisational structures, \u000d\u000aupgrading technology platforms and \u000d\u000areassessing overhead costs.\u000d\u000aBusinesses also need to unlock new \u000d\u000agrowth channels by targeting untapped \u000d\u000aDATA CENTRES, AI KEY TO\u000d\u000aTHAILAND\u2019S NEXT GROWTH PHASE\u000d\u000aMr Atip says Thailand \u000d\u000arisks overestimating the \u000d\u000aimpact of AI adoption \u000d\u000awithout deeper structural \u000d\u000achanges to the economy.\u000d\u000acustomer and industry segments, he said.\u000d\u000aDespite geopolitical tensions and economic uncertainty, investment in technology continues to rise as companies \u000d\u000aincreasingly view AI and digital transformation as critical tools for resilience.\u000d\u000aSupply chain optimisation is another \u000d\u000aa strategic priority as businesses need the \u000d\u000aflexibility to reroute supply chains and \u000d\u000arespond quickly to disruptions or price \u000d\u000afluctuations, which depends heavily on \u000d\u000ahaving accurate, real-time data to support \u000d\u000adecision-making, said Mr Sagoo.\u000d\u000aMeanwhile, Thailand\u2019s large, digitally \u000d\u000asavvy workforce remains a competitive \u000d\u000aadvantage, he noted.\u000d\u000a\u201cTo navigate future uncertainty, the \u000d\u000acountry must accelerate large-scale AI \u000d\u000aupskilling and adoption initiatives to \u000d\u000aensure the workforce becomes \u000d\u000aAI-proficient and ready for the next phase \u000d\u000aof economic transformation,\u201d said Mr \u000d\u000aSagoo.\u000d\u000aThailand is uniquely positioned as a \u000d\u000amarket where East meets West, allowing \u000d\u000abusinesses to leverage the strengths of \u000d\u000aboth Chinese and Western technologies, \u000d\u000ahe said. By integrating the best solutions \u000d\u000afrom both, companies can build greater \u000d\u000aresilience and tailor technology strategies \u000d\u000ato their specific business needs, noted \u000d\u000aMr Sagoo.\u000d\u000aLONG-TERM STRATEGY\u000d\u000aAtip Asvanund, a technology and digital \u000d\u000aeconomy pundit, said Thailand must not \u000d\u000aaccept the myth that simply adopting AI \u000d\u000awill automatically transform the economy.\u000d\u000aHe said the real economic value of the \u000d\u000aglobal AI boom is being captured by \u000d\u000athose who create the technology, not by \u000d\u000abusinesses that merely consume it.\u000d\u000a\u201cThailand remains largely an AI user \u000d\u000arather than an AI producer, with few \u000d\u000adomestic companies participating \u000d\u000ameaningfully in the global AI value \u000d\u000achain,\u201d Mr Atip said.\u000d\u000aNeighbouring economies such as \u000d\u000aMalaysia, Vietnam and Singapore are \u000d\u000abenefiting from their stronger integration \u000d\u000ainto global technology and AI supply \u000d\u000achains, he said. These countries have \u000d\u000apositioned themselves as strategic suppliers, manufacturing components and \u000d\u000aattracting hyperscale data centre investments.\u000d\u000a\u201cAddressing Thailand\u2019s competitiveness challenge requires more than shortterm stimulus measures or policies \u000d\u000adesigned around political cycles,\u201d Mr Atip \u000d\u000asaid.\u000d\u000aThailand needs to create a long-term \u000d\u000astructural transformation roadmap spanning 20-30 years, with education reform \u000d\u000aat its core, he said.\u000d\u000aThailand must strengthen digital sovereignty through smarter regulation while \u000d\u000aattracting the trillion-baht AI infrastructure spending of global tech giants to \u000d\u000aThailand, Mr Atip noted. The country \u000d\u000ashould focus on policies that create local \u000d\u000aeconomic value, including data localisation, stronger digital governance, and \u000d\u000aincentives for foreign platforms to invest, \u000d\u000ahire and transfer technology locally.\u000d\u000aPlatforms such as Google, Gmail and \u000d\u000aLine have effectively become Thailand\u2019s \u000d\u000acritical digital infrastructure, yet most still \u000d\u000aoperate with limited local oversight, he \u000d\u000asaid.\u000d\u000a\u201cIn addition to building competing \u000d\u000aplatforms, Thailand should legally \u000d\u000arequire dominant foreign platforms to \u000d\u000aoperate under Thai jurisdiction and contribute more directly to the domestic \u000d\u000aeconomy,\u201d said Mr Atip.\u000d\u000aA key strategy is enforcing data \u000d\u000alocalisation, following models used by \u000d\u000aJapan, South Korea and Australia, where \u000d\u000aforeign providers are required to store \u000d\u000adata locally under national security or \u000d\u000aprivacy laws.\u000d\u000aWith smart regulations, he noted \u000d\u000aThailand could improve tax collection, \u000d\u000areduce profit outflows, create skilled jobs \u000d\u000aand accelerate technology transfer.\u000d\u000a\u201cSmart regulation is not about blocking foreign technology, but using legal \u000d\u000aframeworks strategically to protect \u000d\u000anational interests, strengthen digital resilience and create competitive advantages for the local economy,\u201d Mr Atip said.\u000d\u000aTHAILAND HAS AN \u000d\u000aOPPORTUNITY TO USE THE \u000d\u000aGLOBAL SHIFT IN CAPITAL \u000d\u000aAND COMPUTING DEMAND \u000d\u000aTO BECOME A REGIONAL \u000d\u000aHUB FOR POWER-BACKED \u000d\u000aAI INFRASTRUCTURE AND \u000d\u000aTHE SOUTHEAST ASIAN \u000d\u000aDATA CENTRE SUPPLY \u000d\u000aCHAIN.\u000d\u000aSUPPARAT SIVAPETCHRANAT \u000d\u000aSINGHARA NA AYUTTHAYA,\u000d\u000aVICE-CHAIRMAN, THAILAND DATA \u000d\u000aCENTER ASSOCIATION\u000d\u000aIT\u000d\u000a28 MID-YEAR ECONOMIC REVIEW 2026","","The retail and restaurant sectors \u000d\u000aare expected to feel the impact \u000d\u000aof the Middle East conflict in \u000d\u000athe second half of this year, with \u000d\u000aindustry associations expressing \u000d\u000aconcern and offering insights into how \u000d\u000aoperators can navigate these turbulent \u000d\u000atimes.\u000d\u000aRestaurants struggled in the first half \u000d\u000aof the year, facing headwinds from \u000d\u000aelevated energy prices caused by the \u000d\u000awar. These increases pushed up the cost \u000d\u000aof raw materials, while rising living \u000d\u000aexpenses diminished consumer \u000d\u000apurchasing power, said Thaniwan \u000d\u000aKulmongkol, president of the Thai \u000d\u000aRestaurant Association.\u000d\u000aEven before the conflict, high household debt had eroded consumer purchasing power, reducing the frequency \u000d\u000awith which they dined out, she said.\u000d\u000aIn addition, the border dispute \u000d\u000abetween Thailand and Cambodia that \u000d\u000aresulted in clashes last year continues \u000d\u000ato weigh on restaurants in border \u000d\u000aprovinces.\u000d\u000aThe outlook for the second half of the \u000d\u000ayear appears grim, as first-half obstacles \u000d\u000aare likely to still weigh on the industry, \u000d\u000aMrs Thaniwan said.\u000d\u000aAlthough the government is expected \u000d\u000ato roll out economic stimulus measures, \u000d\u000asuch as a new co-payment scheme, \u000d\u000athese may be insufficient to revive all \u000d\u000abusinesses in the struggling sector, she \u000d\u000asaid.\u000d\u000aRestaurants with effective cost \u000d\u000amanagement, strong product offerings \u000d\u000aor prime locations in tourist destinations \u000d\u000aare more likely to endure the challenges \u000d\u000ain the second half, Mrs Thaniwan noted.\u000d\u000aHigher expenses and subdued spending are expected to keep pressure on\u000d\u000aThailand\u2019s retail and restaurant sectors, WRITES KUAKUL MORNKUM\u000d\u000a\u201cConversely, small street food \u000d\u000avendors or family-run restaurants \u000d\u000awithout a strong customer base or sufficient financial reserves are at greater risk \u000d\u000aof closure,\u201d she said.\u000d\u000a\u201cIt is too early to predict potential \u000d\u000aworkforce reductions in the second half. \u000d\u000aThe association needs to assess external \u000d\u000afactors and monitor the effectiveness of \u000d\u000agovernment stimulus measures.\u201d \u000d\u000aOPERATIONAL CHANGES\u000d\u000aWith high energy prices and shortages \u000d\u000aof plastic pellets driving up raw material \u000d\u000acosts across the board as local consumer \u000d\u000apurchasing power shrinks, Mrs \u000d\u000aThaniwan said restaurants have adapted \u000d\u000atheir operations.\u000d\u000aFirst, restaurateurs are implementing \u000d\u000acost management controls. Some \u000d\u000arestaurants have opted not to increase \u000d\u000amenu prices, instead reducing portion \u000d\u000asizes or omitting non-essential \u000d\u000aingredients to manage costs.\u000d\u000a\u201cOperators are streamlining their \u000d\u000amenus, aiming to reduce raw material \u000d\u000astock and preparation,\u201d she said.\u000d\u000aFor ingredients that are especially \u000d\u000asensitive to fuel prices such as seafood, \u000d\u000arestaurants have been forced to raise \u000d\u000aprices on those menu items.\u000d\u000aChain restaurants have introduced \u000d\u000anew, more affordable menu options and \u000d\u000aenhanced loyalty programmes in a bid \u000d\u000ato retain customers, said Mrs Thaniwan. \u000d\u000aSmall restaurants with limited \u000d\u000abranches are urged to consolidate their \u000d\u000araw material orders to obtain wholesale \u000d\u000aprices and reduce costs, she said. Some \u000d\u000aoperators have already started adopting \u000d\u000athis practice.\u000d\u000aEateries should also consider \u000d\u000aadjusting their menus to focus on \u000d\u000alocally-sourced ingredients. For \u000d\u000aexample, locally-grown vegetables \u000d\u000aremain affordable and reducing reliance \u000d\u000aon imported produce could lift demand \u000d\u000aRETAIL, DINING HIT BY COST AND DEMAND SQUEEZE\u000d\u000aREGARDING RISING \u000d\u000aPLASTIC PELLET \u000d\u000aCOSTS, I RECOMMEND \u000d\u000aTHE GOVERNMENT \u000d\u000aPROMOTE STORES AND \u000d\u000aDINE-IN RESTAURANTS \u000d\u000aTHAT MINIMISE THE \u000d\u000aUSE OF SINGLE-USE \u000d\u000aPLASTICS.\u000d\u000aSOMCHAI PORNRATTANACHAROEN,\u000d\u000aHONORARY ADVISOR,\u000d\u000aTHAI WHOLESALE AND\u000d\u000aRETAIL TRADE ASSOCIATION\u000d\u000aRETAIL & RESTAURANT\u000d\u000aA woman browses canned food on \u000d\u000ashelves at a Bangkok supermarket. \u000d\u000aRising expenses and elevated household \u000d\u000adebt mean fewer people are eating out.\u000d\u000afor domestic crops and support Thai \u000d\u000afarmers\u2019 incomes, noted Mrs Thaniwan.\u000d\u000aRestaurants can reduce marketing \u000d\u000acosts by handling promotions in-house, \u000d\u000aavoiding expenses associated with intermediaries, she said.\u000d\u000aWith the shift towards independent \u000d\u000aforeign visitors, restaurants in tourist \u000d\u000aareas can increase their visibility by \u000d\u000adeveloping targeted marketing materials \u000d\u000ain multiple languages to attract new customers, noted Mrs Thaniwan.\u000d\u000aTourism remains a key driver in revitalising the Thai economy and is considered one of the fastest ways to generate \u000d\u000aincome for the country, she said, which \u000d\u000acould benefit the restaurant industry.\u000d\u000aGLOOMY RETAIL SECTOR\u000d\u000aSomchai Pornrattanacharoen, honorary \u000d\u000aadvisor to the Thai Wholesale and Retail \u000d\u000aTrade Association, said consumer spending was weak in the first half of 2026.\u000d\u000aConsumer goods prices are expected \u000d\u000ato rise in June as manufacturers begin \u000d\u000aproducing goods using newly priced raw \u000d\u000amaterials, he noted.\u000d\u000aIn some cases, Mr Somchai anticipated consumer goods prices increasing \u000d\u000aby up to 20%. For example, ready-to-eat \u000d\u000ashrimp paste is affected by higher costs \u000d\u000afor plastic containers, plastic wrapping, \u000d\u000aand increased fuel costs to catch shrimp.\u000d\u000aFor the second half of 2026, he expects \u000d\u000athe retail industry to continue to feel the \u000d\u000aeffects of weak consumer spending, with \u000d\u000aagricultural prices remaining low and \u000d\u000athe cost of living rising.\u000d\u000aMeanwhile, retail operators in tourist \u000d\u000aareas must deal with declining numbers \u000d\u000aof foreign arrivals during the low season.\u000d\u000aMr Somchai also warned of a potential influx of cheap goods from abroad \u000d\u000aentering the Thai market.\u000d\u000aMARKET RESTRUCTURE\u000d\u000aHe stressed the need to reassess the \u000d\u000aretail market, expressing concern for \u000d\u000asmall brick-and-mortar businesses that \u000d\u000aface pressure from larger retail operators \u000d\u000aexpanding their convenience store networks.\u000d\u000aMr Somchai suggested the government introduce measures to protect \u000d\u000asmall retail operators, such as zoning \u000d\u000apolicies that reserve certain areas for \u000d\u000alocal businesses, particularly in regions \u000d\u000awith weak consumer spending, while \u000d\u000arestricting large conglomerates from \u000d\u000aentering those areas. \u000d\u000aMany products pass through a lengthy \u000d\u000asupply chain before reaching \u000d\u000aconsumers. Manufacturers sell products \u000d\u000ato retailers, who often rent space in large \u000d\u000amalls and must share a portion of their \u000d\u000arevenue as gross profit.\u000d\u000aSellers using e-delivery platforms pay \u000d\u000asimilar fees, with most malls and platforms operated by large conglomerates.\u000d\u000aHe said the government\u2019s \u201cThai Chuay \u000d\u000aThai Plus\u201d co-payment scheme is \u000d\u000aunlikely to significantly stimulate the \u000d\u000aeconomy as its monthly spending cap \u000d\u000aof 1,000 baht is too limited.\u000d\u000aSome purchases are likely to flow \u000d\u000athrough retailers and platforms tied to \u000d\u000alarge operators, meaning the benefits \u000d\u000awould eventually return to major corporations.\u000d\u000aIf the scheme is approved, Mr \u000d\u000aSomchai said the budget should instead \u000d\u000abe used to support employment and \u000d\u000aenhance business knowledge among \u000d\u000aThai operators.\u000d\u000aAs the government aims to bring \u000d\u000amore vendors into the tax system, he \u000d\u000asaid authorities could leverage participation in the co-payment scheme to \u000d\u000apromote education on taxation and \u000d\u000aaccounting.\u000d\u000aParticipants could be encouraged to \u000d\u000aattend training programmes on taxation \u000d\u000aand accounting procedures, receiving \u000d\u000abenefits such as a grace period for compliance or temporary tax exemptions \u000d\u000aduring the learning period.\u000d\u000aRegarding rising plastic pellet costs, \u000d\u000aMr Somchai recommended the government promote stores and dine-in restaurants that minimise the use of single-use \u000d\u000aplastics.\u000d\u000aHe also urged the government to \u000d\u000aprovide low-cost rental spaces for community markets and small vendors to \u000d\u000ahelp people secure employment opportunities.\u000d\u000aLower rental costs and the absence \u000d\u000aof gross profit charges would enable \u000d\u000asellers to offer products to consumers at \u000d\u000amore affordable prices, noted Mr \u000d\u000aSomchai.\u000d\u000a30 MID-YEAR ECONOMIC REVIEW 2026","",""]