Economists warn of a ‘compounded risk’ era as global instability, weakening domestic demand, and stagnant foreign investment push Thailand toward stagnation.
Prominent economists have issued a stark warning regarding the future of South East Asia’s second-largest economy, describing 2026 as a year of “compounded risks.”
A toxic cocktail of geopolitical instability, dwindling domestic purchasing power, and a failure to attract high-value foreign investment has left Thailand increasingly vulnerable to external shocks.
While 2026 is the “Year of the Horse” in the Chinese zodiac, analysts suggest the economy is more likely to stumble than gallop.
With GDP growth forecasts revised down to a meagre 1.6% to 1.8%, the nation faces the grim prospect of being overtaken by regional peers within the next decade.
The Domino Effect of Global Tensions
Dr Amonthep Chawla, assistant managing director at CIMB Thai Bank, highlighted that while the recent friction between the US and Venezuela was short-lived, the threat of a “domino effect” looms large.
The primary concern remains Iran; any structural change or leadership upheaval there could send shockwaves through global energy markets.
“Geopolitical risk is no longer a distant concern,” Dr Chawla noted. “If the situation in the Middle East escalates, the impact on oil-dependent economies like Thailand will be significant. Conversely, while a de-escalation might lower fuel costs, it risks further strengthening the Baht, which cripples our export competitiveness.”