Thailand’s exports hit record highs and the baht strengthens, but a widening trade deficit, weak tourism and mounting household debt darken the outlook. Rates are cut to 1% as US tariffs reset and growth is forecast at just 1.9% for 2026.
On the same day, the Monetary Policy Committee cut Thai borrowing rates by 25 basis points, and just days after record January exports were announced, the Bank of Thailand Governor delivered a stark assessment of an economy sliding into 2026. Governor Vitai Ratanakorn warned that the country’s private sector debt burden remains a persistent drag, holding back any meaningful prospect of stronger GDP growth. Mr Vitai forecast just 1.9% GDP growth for 2026, despite expectations of better than anticipated export performance.
Thailand’s economy is sending mixed and often contradictory signals at the start of 2026. In recent weeks, the Thai baht has strengthened against the US dollar. At the same time, export figures have broken previous records.
However, tourism arrivals remain below expectations. As a result, policymakers face a divided economic landscape shaped by strong external demand and weak domestic momentum.
In January, exports reached US$31,573.1 million, equivalent to 980,744 million baht. Consequently, shipments rose 24.4% from January 2025. Moreover, this marked the 19th consecutive month of expansion.
Record January exports extend growth streak as imports surge and trade deficit widens sharply
Notably, the figure surpassed the previous record of US$31,044.9 million set in May 2025. Meanwhile, imports also surged to historic levels. They totalled US$34,876.5 million, or 1.097 trillion baht. Therefore, imports increased 29.4% year on year. As a result, Thailand recorded a trade deficit of US$3,303.4 million, or 116,700 million baht.
Although export growth was strong, the bilateral picture varied sharply. Specifically, the deficit with China widened significantly. In January, the shortfall with China reached US$7,223.8 million.
Previously, in January 2025, it stood at US$5,687.4 million. By contrast, Thailand maintained a trade surplus with the United States. However, that surplus narrowed markedly. In January, the surplus with the US was US$473.8 million. A year earlier, it measured US$3,078.3 million.
Export growth was broad across major markets. For example, shipments to the United States rose 43.1%. Likewise, exports to China increased 35.1%. Meanwhile, Japan recorded growth of 2.7%. In addition, exports to the European Union expanded 17.8%. Similarly, ASEAN markets posted gains of 29.8%. However, some regions showed weakness. The CLMV market contracted by 8.7%. By comparison, South Asia grew 11.1%. Australia surged 97.8%. Furthermore, the Middle East rose 13.7%, while Latin America increased 13.9%.
Electronics and agricultural rebound drive export surge as a stronger baht pressures pricing power
The electronics sector led the expansion. In particular, growth was driven by the global shift toward AI and data centre technologies. As a result, electrical appliances recorded sustained gains. Likewise, automobiles and components continued to expand. At the same time, agricultural products rebounded sharply.
For instance, durian and mangosteen exports strengthened. Jasmine rice shipments increased. Frozen shrimp exports also rose. Moreover, processed food exports showed renewed momentum.
On the import side, raw materials and semi-finished goods dominated the increase. These inputs supported export production. In addition, capital goods and machinery imports expanded. Officials noted that the stronger baht supported machinery purchases. Nevertheless, currency strength creates pressure elsewhere. A firmer baht makes Thai goods more expensive abroad. Consequently, export competitiveness may weaken despite strong volumes.
US tariff reset to fifteen per cent reshapes competition as rivals gain equal footing in the market
Trade officials are also tracking developments in the United States. Recently, President Donald Trump raised tariffs on imported goods from trading partners, including Thailand. The move relied on powers under Section 122 of the US Trade Act.
Previously, a 19% retaliatory tariff regime had been imposed. However, the US Supreme Court struck that regime down. As a result, it was replaced with a 15% tariff under a 1974 law allowing temporary measures.
Initially, the 15% tariff replaces the 19% rate applied to Thai goods. Consequently, costs for US importers decline relative to the previous level. Lower import costs may reduce retail prices. Therefore, US consumers could increase purchases of Thai products. In particular, food exports such as chicken, seafood, and canned fruit may benefit. However, competitors also gain from the tariff reset. Previously, some countries faced tariffs of 30% or 40%. Now, those rates have fallen to 15%.
As a result, competitive pressure intensifies, and Thailand gains no relative advantage. Meanwhile, the Ministry of Commerce continues negotiations with the United States. Officials are monitoring whether further measures may follow.
The United States continues to record a trade deficit with Thailand. Therefore, the risk of additional tariff action remains. Accordingly, Thailand remains engaged in talks while assessing possible concessions and market openings.
Weak tourism and rate cut signal a softer domestic outlook despite unexpected export resilience
Beyond trade, tourism presents a weaker counterpoint. So far in 2026, foreign tourist numbers are described as disappointing. Although no precise figures were released, officials acknowledged the shortfall.
However, attention is focused on the European market. European visitors typically spend more per trip. By contrast, short-haul Asian tourists spend less on average. Therefore, recovery in the European segment carries greater revenue implications.
Against this backdrop, monetary policy has shifted. On February 25, 2026, the Monetary Policy Committee voted 4 to 2 to cut the policy interest rate.
Specifically, the rate was reduced by 0.25 percentage points, from 1.25% to 1.00%. The decision took effect immediately. However, two members voted to maintain the rate at 1.25%. Both dissenting members argued for holding steady. Nevertheless, the majority supported easing.
Governor warns structural debt and weak lending will cap growth below potential in 2026
Governor Vitai Ratanakorn outlined the growth outlook publicly. He warned that Thailand faces persistently low expansion. For 2026, he forecast GDP growth of 1.9%. Previously, the projection stood at 1.5%.
Therefore, the outlook has been revised upward. However, it remains below the estimated potential growth rate of 2.7%. Moreover, he noted that Thailand’s growth has declined from levels of 8% in earlier years to around 1.9% now.
Although fourth-quarter 2025 data were stronger than expected, structural weaknesses remain. Household debt continues to weigh on the economy.
Currently, it stands at 86% to 87% of GDP. Previously, it reached 92%. However, the reduction reflects GDP expansion rather than substantial deleveraging. In absolute terms, household debt remains about 16 trillion baht.
Loan quality is also deteriorating. Non-performing loans are increasing steadily. Furthermore, the proportion of loans with quality concerns continues to rise. At the same time, overall lending has contracted for six consecutive quarters. SME lending has declined for 14 straight quarters. Consequently, domestic credit conditions remain tight, and investment constrained.
Trade promotion intensifies global outreach as Thailand fights to defend market share abroad
The Department of International Trade Promotion is responding with market expansion efforts. Director-General Sunanta Kangwalkulkit said export performance remains under close review. Although values are high, uncertainty surrounds the duration of the upcycle.
Therefore, commercial attachés have been instructed to seek new opportunities across markets. Both goods and services are targeted. In the United States, additional engagement with major importers has already begun.
Trump fires back with 10% tariff under a 1974 law after Supreme Court setback. Good news for Thailand
The battle for 2026’s economy has begun. Thailand needs political stability and more foreign tourists
In sum, Thailand enters 2026 with record export values and elevated import volumes. However, the overall trade balance remains negative. Meanwhile, the baht’s appreciation complicates pricing.
Exports are accelerating, yet tourism is underperforming. Interest rates have been cut, yet growth remains below potential. Therefore, the economy stands between strong external demand and entrenched domestic constraints.
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