Thailand’s economy gets a surprise boost as the Bank of Thailand raises its 2026 growth forecast to 2%, backed by a ฿400 billion stimulus package and soaring exports. Inflation could top 5%, but officials insist the spike will be temporary and reject stagflation fears.
Thailand’s central bank has delivered a markedly more optimistic assessment of the economy, raising its 2026 growth forecast as a ฿400 billion government stimulus programme and unexpectedly strong exports offset global uncertainty. The upgrade comes even as policymakers expect inflation to briefly exceed 5%, driven by energy costs, El Niño-related pressures and stronger domestic demand. Yet the Bank of Thailand is dismissing stagflation risks, keeping its policy rate unchanged and forecasting export growth of up to 13%, reflecting growing confidence that the economy can sustain momentum despite an increasingly volatile international backdrop.
The Bank of Thailand has raised its 2026 economic growth forecast, pointing to stronger government stimulus and improving export prospects despite global uncertainty.
Bank of Thailand Governor Vitai Ratanakorn said the economy is now expected to expand by 2.0% in 2026. Previously, the central bank forecast growth of 1.5%. That earlier projection reflected the effects of war and broader uncertainty in the global economy.
Now, policymakers believe domestic stimulus will provide a stronger boost than initially anticipated. At the centre of that assessment is the government’s 400 billion baht loan decree. As part of this, authorities are rolling out measures under the “Thai Helps Thai Plus” campaign.
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Mr. Vitai said those measures have generated greater economic momentum than expected. Consequently, the central bank revised its growth outlook higher. The upgrade reflects stronger domestic demand and increased government spending. It also reflects confidence that stimulus measures will continue supporting activity through next year.
Even so, the central bank expects growth to moderate after the immediate effects fade. GDP is projected to expand by 1.7% in 2027. That would mark a slowdown from 2026. However, officials view the deceleration as a normal consequence of stimulus measures unwinding.
Meanwhile, inflation is expected to accelerate during 2026. The Bank of Thailand forecasts annual inflation of around 3%. Nevertheless, monthly readings are expected to fluctuate sharply. In some months, inflation could exceed 5%.
Notably, the central bank expects inflation to peak at 5.2% in October. Officials attribute the increase to several factors. Energy prices remain elevated. Businesses continue passing higher costs to consumers. In addition, El Niño-related effects could place pressure on prices. Government consumption stimulus is also expected to strengthen demand.
Inflation seen peaking above 5% before easing as central bank signals confidence in outlook
Separately, clean energy promotion measures are expected to contribute to inflationary pressures. Taken together, those factors are expected to push prices higher throughout much of the year.
Despite those projections, the Bank of Thailand said it remains comfortable with the inflation outlook. Mr. Vitai stressed that policymakers do not view the increase as a lasting threat. Instead, the central bank regards the rise as temporary.
According to the governor, inflation should begin easing during the second quarter of 2027. Thereafter, it is expected to return to the target range of 1% to 3%. By that year, annual inflation is projected at approximately 1.4%.
In response to concerns about rising prices, Mr. Vitai signalled no immediate change in policy direction. He said Thailand’s policy interest rate is expected to remain at 1.0%. The Monetary Policy Committee is scheduled to meet on June 24, 2026. At that meeting, members will review economic conditions and interest rate settings.
Policy rate set to stay at 1% as officials expect inflation to retreat during 2027 recovery
At the same time, the central bank rejected suggestions that Thailand faces a risk of stagflation. Such conditions combine weak growth with persistently high inflation. However, Mr. Vitai said current projections do not support that scenario.
Rather, officials expect inflation to retreat after temporary pressures subside. Growth, meanwhile, is expected to remain positive. For that reason, the central bank believes Thailand is not heading toward stagflation.
On another front, policymakers addressed concerns surrounding Thailand’s external balances. Particular attention has focused on the current account deficit recorded in April 2026. During that month, the deficit reached US$7.6 million.
The Bank of Thailand described the figure as temporary. Officials said higher fuel imports played a major role. At the same time, elevated energy prices increased import costs. As a result, the current account moved into deficit.
Central bank dismisses stagflation fears and views current account deficit as a temporary setback
However, the central bank expects those pressures to ease. Looking ahead, officials estimate the current account balance could move close to zero during 2026. Furthermore, the trade balance is projected to return to surplus in the fourth quarter.
That outlook is supported by stronger export performance. Notably, the Bank of Thailand has sharply upgraded its export forecast for the year. Thai exports are now expected to grow between 12% and 13%.
Previously, the central bank projected export growth of 8.1%. The revision reflects stronger-than-expected performance despite a difficult global backdrop. Export demand has remained resilient even as uncertainty continues across major economies.
Exports upgraded to 12-13% growth as trade balance seen returning to surplus later this year
In parallel, stronger exports are expected to support manufacturing activity and business confidence. They are also expected to strengthen trade earnings and offset external risks. Together with stimulus spending, export growth has become a key pillar of the central bank’s outlook.
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For policymakers, the combination of stronger exports and government spending has altered the economic picture. The economy is now expected to perform better than previously forecast. Although growth is likely to slow in 2027, officials believe that slowdown will be orderly.
Ultimately, the Bank of Thailand sees temporary inflation, stable monetary conditions and improving trade performance. Moreover, it expects external imbalances to ease as exports strengthen and fuel-related pressures recede. Against that backdrop, the central bank has adopted a more optimistic view of Thailand’s economic prospects for 2026.
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