Thailand’s economy outpaced forecasts but remains below potential – CBank minutes

Thailand’s economy outpaced initial forecasts in late 2025, with GDP growth reaching 1.3% year-on-year in the second half of the year, driven by a 9.1% rise in exports and resilient private consumption. However, central bank officials emphasized that growth remains below the country’s potential, which is estimated at 2.7%. The Bank of Thailand (BOT) noted that structural challenges, including a strong baht constraining small- to medium-sized exporters, high household debt, and external pressures from U.S. tariffs, continue to weigh on momentum.

While the central bank projects 2026 growth of up to 1.7%, it reiterated that this falls short of long-term potential, requiring policy interventions to address competitiveness and productivity gaps. Recent World Bank analysis highlights opportunities in secondary cities, where GDP per capita growth has outpaced Bangkok by nearly 15 times, offering a pathway to diversify economic activity and reduce regional imbalances.

Fiscal sustainability remains a concern, with public debt projected to rise to 64.6% of GDP in fiscal year 2025 amid expanded stimulus measures. BOT Governor Vitai Ratanakorn stressed the need for structural reforms, including targeted social assistance and improved tax equity, to create fiscal space for investment while maintaining price stability. Despite near-term recovery, aligning growth with potential will demand coordinated efforts to enhance productivity, address external vulnerabilities, and rebalance urban development.