Thailand Cuts 2026 Growth to 1.3% as Iran War Bites
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- Bank of Thailand assistant governor Chayawadee Chai-anant said growth is slowing in 2026, citing Thailand's heavy reliance on imported energy and rising import costs tied to the US-Israeli war with Iran.
- Tourism from Gulf states fell to near zero in March as Iranian attacks closed regional airports; Gulf visitors typically account for 7% of Thailand's total tourism spending, and numbers have yet to fully rebound.
- Malaysian tourist arrivals are also declining, with high fuel prices discouraging cross-border drives that had been a key growth engine for the sector.
- BoT revised its baseline 2026 GDP growth forecast to 1.3% — down from December's 1.9% projection and below the Thai government's February range of 1.5% to 2.5% — with inflation seen at 3.5% in the baseline scenario assuming the war ends in the second half of 2026.
- Chayawadee warned that 'in terms of the worst-case scenarios, there's no limits to it,' and said the central bank's expected $12 billion current account surplus will be revised lower, with a turn into deficit not ruled out.
- Equity and bond outflows from Thailand in February and March were 'manageable' and had already returned to positive territory in April, while interest rate hikes remain unlikely unless inflation persists beyond a year.
- Bangkok will host the IMF autumn meetings in October, giving Chayawadee a platform to showcase 'that Asian countries are having very strong fundamentals.'
Why it matters: Thailand, among the most energy-import-dependent major Asian economies, now faces its weakest baseline 2026 outlook in months — a 1.3% growth print would mark a sharp downgrade from the 1.5%–2.5% range the government endorsed in February. The simultaneous collapse of Gulf tourism (7% of spending) and Malaysian arrivals hits two of the country's few remaining growth engines simultaneously, while the bank's admission that worst-case scenarios have 'no limits' signals policymakers see meaningful tail-risk of recession or a current account flip negative.
