Warning lights flash across Thailand’s economy despite 1.9% GDP growth. Quarterly output falls 0.2%, autos slump 7.2%, factory capacity sinks to a 24-quarter low and the trade deficit passes ฿1.1tn as data centre imports and investments surge.
Thailand’s economy is flashing disturbing warning signs beneath headline GDP growth of 1.9% in the second quarter. Output actually fell 0.2% from the previous quarter, while industrial capacity sank to a 24-quarter low. Automotive activity contracted 7.2%, factory construction fell and almost 50,000 more insured workers became unemployed. Meanwhile, private investment surged 13.4%, driven heavily by imported equipment for booming data centres. Thailand’s trade deficit has already exceeded ฿1.1 trillion in six months. People’s Party MP Veerayooth Kanchoochat says the figures expose “hypothetical growth” and challenges the government’s claim that Thailand has entered a “New Economy”.
Thailand’s 1.9% second-quarter growth figure masks a sharp deterioration across manufacturing, industry and employment, according to a People’s Party MP. Veerayooth Kanchoochat attacked the headline figure after the latest official GDP release. Notably, Thailand’s economy contracted 0.2% from the previous quarter. He said booming data centre investment was concealing increasingly severe weakness elsewhere.
The National Economic and Social Development Council reported the figures for the second quarter of 2026. GDP grew 1.9% compared with the same period last year. However, output declined 0.2% compared with the first quarter. Mr Veerayooth described the headline result as “hypothetical growth”. He said its composition revealed a dramatically different economic picture.
At the centre of his attack was a 13.4% surge in private investment. In particular, he linked much of that growth to machinery and equipment for data centres. Large amounts of that equipment entered Thailand as complete imported systems. Consequently, investment climbed without generating equivalent demand across Thailand’s manufacturing supply chain.
Data centre approvals drive imports higher as factory investment and industrial capacity fall sharply
Mr Veerayooth said data centres had become the “heaviest burden” on the Thai economy. His criticism focused on how projects were approved and what they imported. Specifically, he attacked decisions by the government and Board of Investment to liberalise the sector. Projects received approval without environmental impact assessments, he said.
Equally important, developers faced no conditions requiring domestic materials or local content. That allowed projects to import complete machinery and equipment packages for installation. As a result, data centre construction boosted measured private investment while simultaneously driving imports higher. Mr Veerayooth said this helped keep the headline quarterly GDP figure from turning negative.
In parallel, Thailand’s external trade position deteriorated sharply. The country recorded a trade deficit exceeding ฿1.1 trillion during the first six months. Separately, the trade deficit with China alone soared to ฿1.5 trillion. Mr Veerayooth said deficits were setting new records every month. He particularly blamed imports of complete, end-to-end data centre equipment.
The import figures formed one side of his argument. On another front, established Thai industry was moving sharply in the opposite direction. Industrial factory construction declined for the first time in three years. Capacity utilisation also plunged to 57.5%, its lowest level in 24 quarters.
Automotive sector contracts as unemployment rises and business confidence falls despite investment
Meanwhile, the automotive sector contracted by 7.2%. The industry remains a key part of Thailand’s manufacturing base. Against this backdrop, the business confidence index dropped to 44.0. Together, those indicators contrasted sharply with the 13.4% increase recorded for overall private investment.
Labour figures added another layer to the divide. During one quarter, unemployed insured workers under Section 33 increased by almost 50,000. At the same time, data centre projects continued proliferating. Mr Veerayooth said industrial and labour conditions were therefore deteriorating despite the headline investment boom.
For comparison, private investment was growing at double digits while existing industrial capacity remained heavily underused. Factory construction was falling while data centre projects expanded. Likewise, automotive activity was contracting while imported equipment poured into new technology developments. The business confidence index was also below the 50-point level at 44.0.
Mr Veerayooth then turned his criticism towards the government’s interpretation of the NESDC report. Specifically, he challenged Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas. Mr Ekniti had interpreted the latest economic figures positively. He also declared that Thailand had moved into a “New Economy”.
Veerayooth challenges Ekniti’s ‘New Economy’ claim as data centres rely heavily on imported equipment
By contrast, Mr Veerayooth questioned whether liberalised data centre investment justified that description. He pointed directly to tax exemptions granted to the sector. Furthermore, he highlighted the absence of local-content requirements. Under those arrangements, data centre operators could import complete systems without sourcing equivalent equipment from Thai manufacturers.
From his perspective, that structure concentrated the domestic benefits among a narrow group. He identified landowners and construction contractors as the principal beneficiaries. Thai producers, workers and SMEs received no comparable benefit, he said. Instead, imported machinery accounted for much of the capital expenditure behind the investment surge.
The timing also formed part of his criticism. Once unrestricted imports had been approved, he questioned how local-content conditions could subsequently be introduced. He directly challenged the government over whether those economic benefits could now be redirected towards domestic producers.
“Once the government allows data centres to import everything, how can they regulate local content to benefit the Thai economy retroactively?” he asked.
People’s Party MP questions stimulus priorities as manufacturing and employment indicators weaken
Beyond investment policy, Mr Veerayooth questioned the government’s wider economic priorities. He contrasted conditions across industry with consumption stimulus programmes, including the 60/40 split. At issue, he said, was the worsening position facing manufacturers and industrial workers.
“Besides consumption stimulus measures like the 60/40 split, does the government see the hardship faced by Thai industries and workers?” he asked. “When will they seriously help Thai industries?”
The latest figures provided the basis for his challenge. First, annual GDP growth remained positive at 1.9%. Yet quarter-on-quarter GDP moved backwards by 0.2%. Second, private investment surged 13.4%, while industrial capacity utilisation fell to 57.5%.
Elsewhere, automotive activity contracted 7.2%, while factory construction declined for the first time in three years. Business confidence fell to 44.0. Moreover, almost 50,000 additional Section 33 insured workers became unemployed within one quarter.
Trade deficit surges as imported data centre equipment fails to generate orders for Thai manufacturers
External trade figures presented another striking contrast. Thailand’s trade deficit exceeded ฿1.1 trillion during the first half of 2026. More significantly, Mr Veerayooth put the deficit with China alone at ฿1.5 trillion. He connected those figures directly with rising imports for data centre developments.
For Mr Veerayooth, the composition of the 13.4% private investment increase was therefore crucial. Imported equipment could increase capital investment immediately. Nevertheless, it did not necessarily produce corresponding orders for Thai manufacturers under the existing arrangements.
At the same time, industrial capacity utilisation showed significant spare capacity within Thailand’s existing manufacturing sector. The 57.5% rate marked the weakest level across 24 quarters. Factory construction had also turned down after three years of growth. Additionally, automotive production recorded a significant contraction.
Against that industrial backdrop stood the rapid proliferation of data centre projects. Their machinery could be imported without local-content conditions, according to Mr Veerayooth. Likewise, the projects benefited from tax exemptions and investment liberalisation. He said those policies primarily benefited landowners and construction contractors inside Thailand.
Government faces questions over retrospective local-content rules after approving data centre imports
The People’s Party MP also attacked the sequencing of government policy. Data centres had already received permission to import their required equipment. Therefore, he questioned whether domestic sourcing obligations could realistically be imposed retrospectively.
“Once the government allows data centres to import everything, how can they regulate local content to benefit the Thai economy retroactively?” Mr Veerayooth asked.
His broader argument focused on the gap between headline GDP and the underlying industrial indicators. Annual growth remained positive. Conversely, quarter-on-quarter output contracted while several major manufacturing indicators weakened simultaneously.
Industrial capacity utilisation was at a 24-quarter low. Automotive activity was down 7.2%. Factory construction had fallen for the first time in three years. In addition, the number of unemployed Section 33 workers rose by almost 50,000.
Private investment presented the opposite picture, climbing 13.4%. Yet Mr Veerayooth said imported data centre machinery accounted for much of that strength. Accordingly, he rejected a simple reading of investment growth as evidence of stronger domestic industry.
Veerayooth rejects ‘New Economy’ reading as GDP contracts quarterly and industrial indicators weaken
Finally, he returned to Mr Ekniti’s description of Thailand entering a “New Economy”. Mr Veerayooth questioned whether the term matched the underlying economic structure described by the NESDC figures.
“Is this truly the New Economy era, or is it tying the future of the Thai economy to data centres that only benefit Thai landowners and construction contractors?” Mr Veerayooth concluded.
The dispute therefore centres on two sharply different readings of Thailand’s second-quarter performance. GDP grew 1.9% annually, while private investment surged 13.4%. Yet output contracted from the previous quarter as key industrial indicators deteriorated.
Something gone wrong in the business world as confidence plummets to a three year low in survey
Huge investments in Thai data centres draw warning from leading industry leader about scarce resources
For the People’s Party MP, those contrasting numbers were the central issue. Data centre investment was expanding rapidly while manufacturing capacity, automotive activity, factory construction and insured employment weakened. At the same time, massive equipment imports were feeding record trade deficits.
The result was a 1.9% headline growth figure alongside a 0.2% quarterly contraction. Behind it stood a 13.4% investment surge and industrial capacity utilisation of only 57.5%. Those numbers formed the core of Mr Veerayooth’s attack on the government’s “New Economy” assessment.
Join the Thai News forum, follow Thai Examiner on Facebook here
Receive all our stories as they come out on Telegram here
Follow Thai Examiner here
Further reading:
Something gone wrong in the business world as confidence plummets to a three year low in survey
Now the government’s crackdown targets unlicensed hotels. Five managers arrested in Phuket raids
Top Bhumjaithai Party figure defends the party’s position on cannabis. Only supported medical use
