Thailand posts its strongest growth in 11 years as exports and investment surge, but soaring oil prices, rising inflation, weakening tourism and a deepening Middle East-linked energy crisis threaten to derail the economy despite shock 2.8% GDP growth.
Thailand stunned markets on Monday with its strongest economic growth in 11 years, yet the surprise 2.8% first-quarter expansion came as signs of crisis intensified across the wider economy. While exports and investment surged far beyond forecasts, ministers simultaneously warned of an escalating energy shock tied to the Middle East war, oil prices that could remain high for two more years, the highest inflation since 2023 and a tourism sector sliding into disruption. With households facing rising living costs, businesses squeezed by soaring fuel and transport expenses and the government pushing ahead with a controversial 400 billion baht borrowing programme, the latest figures exposed an economy posting headline growth while pressure rapidly builds underneath.
Thailand’s economy expanded by 2.8% in the first quarter of 2026, according to official data released on Monday. The figure exceeded market expectations and marked the strongest annual growth rate in 11 years.
However, the stronger headline number concealed mounting pressure elsewhere in the economy. Rising oil prices, accelerating inflation and weakening tourism are now clouding the outlook for the rest of the year.
Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas said growth accelerated from 2.5% in the previous quarter. Moreover, he said both private and public investment drove the expansion.
Thailand posts strongest GDP growth in 11 years but quarterly momentum remains unexpectedly weak
The National Economic and Social Development Council confirmed annual GDP growth reached 2.8% during the January-to-March period. In contrast, analysts surveyed by Reuters had forecast only 2.2% growth. Meanwhile, seasonally adjusted quarterly growth reached just 0.7%. Even so, that still exceeded the market forecast of 0.1%.
Nevertheless, the quarterly figure exposed weaker underlying momentum. The annual growth rate appeared far stronger than the quarter-on-quarter pace. Thailand’s economy expanded by only 2.4% in 2025. Furthermore, the country has continued lagging behind regional rivals since the pandemic. The NESDC, therefore, maintained its full-year growth forecast at between 1.5% and 2.5%. However, worsening external pressures are now threatening that outlook.
Mr. Ekniti described investment as the principal engine behind first-quarter growth. In particular, private investment surged by 10.1%. That marked the first double-digit increase in private investment in 11 years.
Private investment surges as exports rebound sharply and Moody’s lifts Thailand’s outlook to stable
Moreover, public investment also strengthened during the quarter. Mr. Ekniti said investment stimulates short-term activity while increasing long-term economic capacity. Furthermore, he linked the expansion to the government’s BOI Fast Pass programme, which accelerates approvals for investment projects.
According to the Finance Ministry, faster approvals encouraged fresh private-sector activity. Consequently, officials believe that stronger investment supports broader economic growth.
Mr. Ekniti also cited the recent decision by Moody’s to revise Thailand’s credit outlook from negative to stable. He said stronger investment conditions contributed to the improved outlook.
Exports also recorded unexpectedly strong gains during the quarter. Mr. Ekniti said exports expanded by 17.8% during the first three months of 2026. Meanwhile, the NESDC sharply raised its full-year export forecast. The agency now expects exports to grow by 9.6% this year. Previously, officials had forecast only 2% growth. Therefore, the revised projection marked a dramatic adjustment.
Thailand warns export-led recovery faces mounting risks from inflation and energy prices this year
Exports remain central to Thailand’s economy. However, officials warned that future growth still depends heavily on global conditions. Mr. Ekniti said Thailand has relied on exports for decades.
Therefore, he stressed the need for continued investment expansion to support long-term competitiveness. He said stronger investment would help maximise the benefits of export-driven growth while strengthening domestic economic activity.
At the same time, the Finance Ministry acknowledged mounting economic risks. Rising energy costs now dominate official concerns. Mr. Ekniti warned that Thailand faces an escalating energy price crisis.
Moreover, he said inflation and living costs are already rising sharply. He stressed that GDP figures do not reflect the burden carried by households. Instead, inflation directly affects purchasing power and business costs.
Rising oil costs and the Middle East conflict drive Thailand’s highest inflation rate since 2023 in April
Businesses are also facing increasing pressure. In particular, small and medium-sized enterprises are struggling with rising operating expenses. Many companies cannot fully pass higher costs onto consumers.
Consequently, profit margins are narrowing across several sectors. Thailand is also confronting deteriorating external balances. Rising imports have pushed balance-of-payments figures deeper into negative territory.
Meanwhile, global oil prices continue climbing because of the Middle East conflict. In addition, the prolonged blockade of the Strait of Hormuz has intensified supply concerns. Mr. Ekniti warned that elevated oil prices could continue for another two years. Therefore, inflationary pressure may persist well into the future.
Commerce Ministry data released on Monday showed inflation accelerating sharply in April. Headline inflation rose by 2.89% year-on-year. That was the highest reading since February 2023. Moreover, it marked the first annual increase in inflation in a year. The headline Consumer Price Index reached 103.3 in April.
Thailand outlines two inflation scenarios as diesel and electricity costs remain elevated through 2026
Nantapong Chiralerspong, director-general of the Trade Policy and Strategy Office, said fuel prices were the main driver behind inflation. According to the ministry, geopolitical tensions have sharply increased domestic fuel costs. Consequently, transport and food prices also rose.
Mr. Nantapong said higher fuel prices lifted public transport costs nationwide. Airfares, motorcycle taxi fares and logistics expenses all increased. Prepared food prices also climbed because operators faced higher energy bills and transport charges.
Meanwhile, meat prices continued to rise across the country. Pork and chicken prices increased because of higher feed and logistics costs. Therefore, inflationary pressure spread across multiple sectors simultaneously.
Only a small number of products recorded lower prices in April. Those included deodorant, facial cleansing foam and mangoes. However, the Trade Policy and Strategy Office expects inflation to rise further in May. Officials forecast annual inflation of 3.06%. The ministry said energy prices remain the biggest threat. Furthermore, prepared food prices are expected to continue climbing.
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Officials outlined two possible inflation scenarios for 2026. Under the first scenario, diesel prices would remain at 44.24 baht per litre during April and May. Afterwards, prices would decline to 32.35 baht later in the year.
Electricity prices would stand at 3.95 baht per unit from May through August. Subsequently, prices would ease slightly to 3.88 baht. Prepared meal prices would rise by 3% under that scenario. Therefore, headline inflation would range between 1.5% and 2.5%.
However, the second scenario projected more prolonged inflationary pressure. Under that outlook, diesel prices would remain at 44.24 baht per litre from April through June. Afterwards, prices would decline only to 34 baht. Electricity prices would remain at 3.93 baht per unit through December. Meanwhile, prepared meal prices would rise by 6%. Under that scenario, headline inflation would range between 2.5% and 3.5% in 2026.
Thailand tourism slump deepens as inflation and energy pressures threaten wider economic recovery
Despite the stronger GDP figures, Thailand’s tourism industry is now facing severe disruption. Foreign arrivals have fallen sharply in 2026. Tourism remains one of Thailand’s largest foreign-exchange earners. Moreover, the sector supports millions of jobs nationwide. The industry also distributes income widely across the economy. In particular, lower-income groups and small businesses depend heavily on tourism activity.
However, plummeting arrivals are now weakening domestic demand. Consequently, pressure is increasing across hotels, transport operators and local businesses. The tourism slowdown comes as households already face rising living costs.
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At the same time, businesses are confronting higher fuel and operating expenses. Therefore, the economy now faces simultaneous pressure from inflation, energy costs and weakening tourism revenue.
The stronger first-quarter GDP figure provided temporary relief for policymakers. However, rising prices, weakening tourism and deteriorating external conditions continue threatening economic stability through the remainder of 2026.
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