Thailand's Q2 GDP Beats Forecasts; Full-Year Outlook Raised

Thailand's economy expanded at a faster-than-expected pace in the second quarter, according to official data released on Monday. Gross domestic product (GDP) grew 1.9% in the April-June period compared with the same time last year, surpassing the 1.7% median forecast from a poll of analysts.

The National Economic and Social Development Council reported that on a seasonally adjusted quarterly basis, the economy contracted by 0.2% — a milder decline than the 0.6% contraction that had been anticipated. This follows a 2.8% year-on-year expansion and a revised 0.6% quarterly growth recorded in the first three months of the year.

Buoyed by these results, the planning agency has raised its growth projection for the full year of 2026 to a range of 2.0% to 2.5%, up from its previous forecast of 1.5% to 2.5%. The economy, which grew 2.4% last year, has continued to lag regional peers since the pandemic, with high household debt restraining consumption.

The agency also revised its export outlook, now expecting a 15.1% increase this year, a significant upgrade from the earlier forecast of 9.6% growth. The tourism sector is projected to welcome 32 million foreign visitors in 2026, unchanged from the previous estimate, though still below the record of nearly 40 million arrivals seen in 2019.

Data showed the unemployment rate stood at 0.96% in the second quarter, slightly up from a revised 0.94% in the prior quarter. Economic activity during the quarter was dampened by weak consumption, a consequence of high household debt and elevated living costs.

In response, the government launched a 176 billion baht ($5.3 billion) consumer subsidy scheme in June, part of a broader 400 billion baht borrowing plan designed to mitigate the impact of higher oil prices and ease the cost of living. Last month, the finance ministry raised its own 2026 growth forecast to 2.5% from 1.6%, citing stronger exports and domestic demand.

The central bank left its key interest rate unchanged at 1.00% in June, with Governor Vitai Ratanakorn indicating there was no immediate need for a hike. The next monetary policy review is scheduled for August 26. Headline inflation slowed to 1.95% in July, bringing it within the central bank's target range of 1% to 3%.