Thailand faces a two-speed economy as the Middle East War fuels inflation, crushes confidence and drives debt fears, while a ฿701 billion tourism boom and surging technology exports provide a lifeline despite widening cracks among households and businesses.
Thailand faces a pivotal economic challenge as the Middle East War drives inflation higher, weakens consumer confidence and pushes the current account into deficit, exposing a widening divide between pressured households and the country’s strongest sectors. While confidence fell to a four-year low in April and businesses report rising costs and weaker demand, a ฿701 billion tourism surge and a sharp export recovery led by technology are helping support the economy.
Thailand’s economy is facing a difficult balancing act in 2026 as the Middle East War drives inflation higher and weakens confidence. Rising import costs have also pushed the country’s current account into deficit. Yet stronger tourism earnings and export growth are offering important support.
In April, inflation reached 2.89% as energy prices climbed amid instability in the Middle East. As a result, Thai households have faced mounting living expenses and reduced purchasing power. Banks have also tightened credit as economic uncertainty has intensified.
At the same time, the government has increased borrowing to support the Thai Helps Thai Plus stimulus programme. The scheme carries approximately ฿170 billion to encourage domestic spending through September.
Consumer fears rise as K-shaped economy exposes pressure from inflation and rising living costs
However, the benefits of stronger economic sectors have not reached every part of the economy. Thailand is increasingly displaying a K-shaped recovery, with some industries advancing while others remain under pressure.
The strongest warning came from consumers. On Thursday, the University of the Thai Chamber of Commerce reported a sharp decline in confidence. The Consumer Confidence Index fell to 49.5 in May, the weakest reading since December 2022.
According to the UTCC’s Centre for Economic and Business Forecasting, the Middle East conflict and elevated oil prices remain major concerns. These factors are expected to slow economic growth and increase the cost of living.
Meanwhile, confidence in the overall economy fell from 44.1 to 43.1 during May. Confidence in employment declined from 48.6 to 47.5. Future income confidence also weakened from 59.0 to 57.9.
Notably, all three measures remained well below the standard benchmark level of 100. This reflected persistent concern over the economic outlook, employment prospects and future earnings.
Consumer spending remains weak as households await the impact of stimulus and energy measures
Current confidence also weakened. The index dropped from 34.7 in April to 33.6 in May. Likewise, the Future Confidence Index fell from 58.3 to 57.3.
Looking ahead, the UTCC expects consumers to remain cautious with spending during the first half of the year. Consumers are waiting for greater clarity over the Middle East conflict and its possible duration.
In addition, households are monitoring government measures to reduce energy-related pressures. They are also assessing the effectiveness and timing of economic stimulus policies.
The May and June confidence figures will therefore become an important indicator for economists. They will reveal whether government support measures have begun rebuilding consumer sentiment.
As part of this effort, the government launched the Thai Helps Thai Plus programme on June 1. The initiative will continue until the end of September and aims to stimulate domestic consumption.
Tourism rebounds strongly as visitor spending rises faster than arrivals during a May recovery
Separately, Thailand’s tourism sector has delivered a stronger-than-expected recovery. Earlier concerns had emerged over slowing international arrivals and weaker tourism momentum.
On June 11, Prime Minister’s Office Deputy Spokesperson Ploytalay Laksmisangchan announced improved tourism figures. Thailand welcomed 2.35 million foreign tourists during May.
This represented annual growth of 3.54%. More importantly, visitor spending accelerated at a much faster pace than arrivals.
Foreign tourists generated ฿108 billion during May. This represented a year-on-year increase of 12.77%, reflecting stronger expenditure by visitors.
Malaysia remained the largest market during the month. China, India, Russia and Singapore completed the five largest source countries.
In parallel, longer-term tourism figures highlighted the industry’s continued economic importance. From January 1 to June 7, Thailand received 14,515,978 foreign visitors.
Thailand tourism passes ฿701 billion as China leads arrivals despite Middle East pressures
Those travellers generated approximately ฿701.36 billion in revenue during the period. China remained the largest source market with 2,386,714 arrivals.
Malaysia followed with 1,839,151 visitors. India contributed 1,103,945 tourists, while Russia recorded 964,670 arrivals. South Korea added another 552,621 visitors.
Nevertheless, the Middle East conflict continues to affect global travel patterns. Higher fuel and transport costs are encouraging travellers to reduce long-distance journeys.
In response, the government is promoting nearby destinations and easier travel routes. Officials are also seeking tourism models focused on sustainability, energy efficiency and higher-value experiences.
On another front, Thailand’s export sector has surprised economists and businesses. The Joint Standing Committee on Commerce, Industry and Banking upgraded its outlook on June 10.
According to Mr Payong Srivanich, President of the Thai Bankers’ Association, exports and government stimulus supported the improved forecast.
The committee raised expected GDP growth to between 1.6% and 2.0%. Previously, it projected expansion of only 1.2% to 1.6%.
Export turnaround lifts GDP forecast as business groups revise Thailand growth outlook upward
The inflation forecast was also revised. The JSCCIB now expects inflation between 2.5% and 3.0% during 2026.
Earlier estimates ranged from 2.0% to 3.0%. Export expectations experienced an even sharper reversal.
The committee now forecasts export growth between 8% and 10%. Previously, it was expected that there would be no export growth this year.
Much of the improvement came from technology products. Merchandise exports increased by 18.9% during the first four months.
Technology exports surged by 48.4%, supported by global investment in AI and data centres. Similar trends appeared across several Asian economies.
Technology export boom masks deeper weaknesses in traditional sectors and employment
However, the gains have not spread evenly across Thailand’s economy. Many technology exports depend heavily on imported materials.
Consequently, the direct benefits for domestic supply chains remain limited. Traditional industries continue facing weaker revenue and elevated production costs.
Business groups have expressed concern over expensive raw materials and declining competitiveness. Domestic demand has also remained under pressure before the full impact of stimulus measures.
Beyond exports, employment remains another major concern. Data centres require substantial energy and water resources but may create relatively few jobs.
The JSCCIB said Thailand’s economy displays a K-shaped pattern. Upper-performing industries have benefited from exports and foreign investment. However, lower-performing sectors continue to experience significant pressure.
Listed firms face rising costs and falling revenue as the K-shaped economic divide widens
Recent figures from more than 300 listed companies revealed increasing financial strain. Many reported higher costs and falling revenue.
The JSCCIB Chairman said: “The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) is concerned about the pressure on the lower-level ‘K’ (Key Factors) which are not benefiting from increased exports and FDI. Recent data from over 300 listed companies on the Stock Exchange of Thailand shows that they have been affected by increased costs and decreased revenue. Therefore, it is necessary to urgently restructure the economy, transforming the upper-level ‘K’ into a key ‘catalyst’ that creates added value, transfers FDI into Thailand’s real economy, generates employment for Thai people, and enables Thai businesses to benefit more.”
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For now, Thailand enters the second half of 2026 with sharply contrasting signals. Inflation, debt pressures, weaker confidence and higher costs continue to burden households and many businesses.
Yet tourism revenue, stronger exports and government spending have provided important economic support. The next few months will determine whether these strengths can offset continuing pressure from the Middle East War and higher living costs.
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