Jakarta –
The economic condition of Indonesia’s neighboring country, Thailand, is not good. The Bank of Thailand (BoT) or Thailand’s central bank stated that the country’s economy is facing various challenges, including a long-term decline in competitiveness.
Reporting from Reuters, Wednesday (7/1/2026), exports are expected to be pressured by United States (US) tariffs, as well as the baht exchange rate which is considered too strong and difficult to weaken.
As the second largest economy in Southeast Asia, Thailand is currently burdened with a number of pressures at once, ranging from a strengthening currency, tariffs from the US, high household debt, border conflicts with Cambodia, to political uncertainty ahead of the elections which are scheduled to take place in early February.
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“This year is full of uncertainty,” said Deputy Governor of the Bank of Thailand, Piti Disyatat.
“Policy space is limited, but that doesn’t mean it doesn’t exist at all. If we deem it necessary, the policy will be used,” he continued
In a report released ahead of the policy forum, the Bank of Thailand estimated economic growth in the second half of last year to reach 1.3% on an annual basis. In the same period, exports recorded growth of 9.1%.
Thailand’s Ministry of Trade reported the main consumer price index (CPI) fell 0.28% in December compared to a year earlier, after recording an annual decline of 0.49% in the previous month.
This figure is still far below the central bank’s inflation target which is in the range of 1% to 3%. Meanwhile, core inflation, which excludes energy and fresh food prices, rose 0.59% on an annual basis in December.
Throughout 2025, the headline CPI fell 0.14% compared to the previous year, mainly due to lower fuel and electricity prices. The Ministry of Trade estimates that headline inflation will be in the range of minus 0.5% to 1% in the first quarter of 2026, and around 0% to 1% for the whole of 2026.
The central bank assesses that medium-term inflation expectations are still maintained within the target of 1%-3%, but does not rule out the possibility of deflation risks emerging in the future.
The central bank also highlighted that the strong baht has tightened liquidity for small and medium-sized exporters, thereby suppressing freight performance. Over the past year, the baht strengthened more than 10% against the US dollar.
The day before, Piti Disyatat said that Thailand’s economic growth was expected to return to positive in the fourth quarter of 2025. He was also optimistic that last year’s economic growth target of 2.2% could be achieved.
(ily/hns)
