Thailand’s post‑pandemic recovery is losing momentum, with growth cooling for a second straight year and the International Monetary Fund urging Bangkok to use its limited fiscal and monetary firepower more surgically while accelerating long‑promised structural reforms. The IMF’s Executive Board warns that external headwinds, weak credit and soft domestic demand are converging to slow the economy further in 2026.
Slowing recovery, softer prices
Real GDP growth is estimated to have slipped from 2.5 percent in 2024 to 2.1 percent in 2025 as both global and local drags intensified. Trade policy uncertainty, still‑tight financial conditions and a slower‑than‑hoped rebound in foreign tourist arrivals all weighed on output. Inflation stayed subdued, held down by lower energy and raw food prices and by lacklustre domestic demand, underlining that Thailand’s problem is now weak momentum rather than overheating.
Looking ahead, the IMF projects growth will moderate again to 1.6 percent in 2026 as external headwinds persist and household and corporate balance sheets constrain spending. Risks to this outlook are “elevated and tilted to the downside,” with prolonged trade tensions, global market volatility and domestic political uncertainty all flagged as potential brakes on activity and inflation.
Key macro indicators snapshot
| Indicator | 2024 | 2025 (estimate) | 2026 (projection) | Notes |
|---|---|---|---|---|
| Real GDP growth (percent) | 2.5 | 2.1 | 1.6 | IMF Article IV estimates. |
| Inflation trend | Subdued | Subdued | Subdued | Held down by lower energy and food prices, weak demand. |
| Credit conditions | Tightening | Tight | Tight | Constrained credit growth, elevated credit risks. |
| External stability | Robust | Robust | Robust | Supported by ample reserves and moderate external debt. |
Policy space under pressure
With growth slowing and inflation low, Bangkok has leaned on a mix of targeted fiscal support and monetary easing to cushion the blow. Authorities have rolled out measures aimed at vulnerable households and consumption, stepped up efforts to restructure household debt, and provided liquidity support for small and medium‑sized enterprises. The central bank has adopted an accommodative stance to support domestic demand and counter downside risks to inflation.
Even so, the IMF Board stressed that policy space is limited and must be used “carefully calibrated,” anchored in a credible medium‑term consolidation strategy. Directors welcomed Thailand’s commitment to fiscal prudence through its Medium‑Term Fiscal Framework but underlined that effective implementation—especially on revenue mobilisation and expenditure prioritisation—will determine whether buffers can be rebuilt.
IMF’s fiscal and monetary prescriptions
On the fiscal side, the Fund wants support to remain highly targeted and “parsimonious,” focused on protecting the most vulnerable while shifting room toward growth‑enhancing investment and stronger social protection. Directors urged Thailand to raise revenues to rebuild fiscal buffers, strengthen social safety nets and create space for public spending that can lift potential growth. They also highlighted the need to reinforce fiscal rules and improve public financial and debt management to bolster policy credibility and effectiveness.
On the monetary front, Directors broadly supported the current accommodative stance and saw scope for further data‑dependent easing if downside risks materialise. They called for continued work to strengthen policy transmission, including through measures that address elevated household debt, and reiterated that the exchange rate should remain a key shock absorber, with foreign exchange intervention reserved for disorderly market conditions driven by non‑fundamental shocks.
Financial stability and household debt strain
Despite tighter financial conditions and rising credit risks, the IMF judges systemic risks in Thailand’s financial sector to be contained for now. Still, Directors urged supervisors to stay vigilant, especially with respect to savings cooperatives and other pockets where governance gaps or risk concentrations could emerge. They emphasised the importance of facilitating orderly household debt restructuring and supporting SMEs, while maintaining strong governance standards and avoiding moral hazard.
Strengthening Thailand’s framework for anti‑money laundering and combating the financing of terrorism (AML/CFT) remains a priority in the Fund’s view. A more robust regulatory and supervisory environment, the Board argued, would help buttress confidence in the financial system at a time of subdued growth and volatile global conditions.
Financial sector and policy focus
| Area | IMF assessment / recommendation |
|---|---|
| Systemic financial risks | Contained but require close monitoring under tight conditions. |
| Household debt | Elevated; needs structured restructuring frameworks and better transmission of monetary easing. |
| SMEs | Require liquidity support paired with strong governance to limit moral hazard. |
| Regulation and supervision | Should be strengthened, including oversight of savings cooperatives. |
| AML/CFT framework | Needs further reinforcement to support financial integrity. |
Reform push: from productivity to climate
Beyond near‑term macro management, the IMF used the Article IV review to reiterate a familiar message: Thailand’s medium‑term prospects hinge on faster, deeper structural reforms. The Board argued that a deteriorating external environment makes it even more urgent to lift productivity, diversify exports and broaden social protection.
Priority areas include deepening trade and financial integration, advancing export sophistication and reviving structural transformation to raise labour productivity. Directors also highlighted the need to reduce informality, strengthen social safety nets, improve the business environment and governance, and push ahead with Thailand’s climate agenda. Taken together, these reforms are meant to support external rebalancing and raise the country’s medium‑term growth ceiling at a time when cyclical support tools are constrained.
