BANGKOK: Thailand's economy slowed in the second quarter of 2026 but still beat forecasts, with stronger private investment offsetting softening consumption and a decline in public investment, official data showed on Monday, as the government raised its outlook for the year.
Southeast Asia's second-largest economy will be supported by higher private investment, government spending and exports, the National Economic and Social Development Council said.
The economy expanded 1.9% in the April-June quarter compared to a year earlier, beating the median forecast of 1.7% in a Reuters poll. The planning agency is now predicting growth of 2.0% to 2.5% for the whole year, compared with a previous estimate of 1.5% to 2.5%. On a seasonally adjusted quarterly basis, the economy shrank 0.2% in the April-June quarter, a smaller contraction than the poll forecast of 0.6%.
In the January-March quarter, growth was 2.8% on the year and a revised 0.6% on the quarter. In the first half of the year, the economy grew 2.4% annually.
"The economy is expected to grow more strongly in the third quarter than in the second, which was hit quite hard by the conflict in the Middle East," agency chief Danucha Pichayanan told a briefing.
The baht strengthened after the GDP data release, while the benchmark index rose by 1%.
"With inflation losing momentum and growth below 2% year on year, monetary policy is likely to remain the status quo, with the policy rate at 1% over the next 12 months," said Kobsidthi Silpachai, head of Capital Markets Research at Kasikornbank.
In June, the central bank left its key interest rate unchanged at 1.00%. The next monetary policy review is on August 26, and Bank of Thailand Governor Vitai Ratanakorn has said there was no need to raise interest rates for now. The economy expanded 2.4% last year and has lagged regional peers since the COVID-19 pandemic, with stubbornly high household debt restraining consumption.
The agency forecast that exports, a key driver of the economy, would increase 15.1% this year, up from a previous forecast of a 9.6% rise.
The tourism sector, another major source of growth, is expected to see 32 million foreign arrivals this year, the same as previously forecast, the agency said. Thailand registered a record of nearly 40 million foreign visitors in 2019, before the pandemic.
The unemployment rate stood at 0.96% in the second quarter versus a revised 0.94% in the previous quarter, the agency said.
In the April-June quarter, the economy was weighed down by weak consumption due to high household debt and living costs. The government rolled out a 176 billion baht ($5.33 billion) consumer subsidy scheme in June, under a wider 400 billion baht borrowing plan to address the impact of higher oil prices and ease the cost of living. Last month, the finance ministry raised its 2026 growth forecast to 2.5% from 1.6%, citing higher exports and domestic demand as well as government support measures. The headline inflation rate slowed to 1.95% in July, inside the central bank's target range of 1% to 3%. The planning agency projects headline inflation at 1.5% to 2.0% this year.
($1 = 33.05 baht) - Reuters
