Economy May 14, 2026 02:31 AM

Thailand’s Q1 Growth Eases as Tourism Falters Despite Strong Tech Exports

Economists’ poll points to barely positive quarterly GDP amid weak consumption and a sharp drop in visitors from Gulf states

By Hana Yamamoto

A recent poll of economists indicates Thailand’s economy likely expanded 2.2% year-on-year in the first quarter of 2026, slowing from 2.5% in the previous quarter, with seasonally adjusted quarterly growth estimated at just 0.1%. The slowdown reflects softer domestic spending and a pronounced tourism downturn linked to regional flight disruptions, even as exports tied to artificial intelligence-related electronics and data centre equipment continued to grow strongly.

Thailand’s Q1 Growth Eases as Tourism Falters Despite Strong Tech Exports

Key Points

  • Q1 2026 GDP likely rose 2.2% year-on-year, down from 2.5% in Q4 2025; quarterly seasonally adjusted growth is estimated at a marginal 0.1%. - Impacts consumer-facing sectors and domestic retail activity.
  • Tourism weakened sharply at quarter-end, with arrivals down 1.8% in February and 8.7% in March; travel from Gulf countries fell to near zero in March due to regional airport closures, while Malaysian visitor flows softened due to higher fuel costs. - Impacts hospitality, transport, and retail sectors dependent on foreign tourists.
  • Exports, especially electronics linked to AI and data centre equipment, remained strong: March exports rose 18.7% to $35.16 billion, the 21st month of consecutive growth, and overall shipments were up nearly 18% in Q1. - Supports manufacturing, logistics, and export-oriented technology sectors.

A poll of economists conducted between May 8 and May 14 found Thailand’s economic expansion likely eased in the January-March quarter of 2026, with annual growth projected at 2.2%, down from 2.5% in the prior quarter.

The survey covered 17 economists and produced forecasts that ranged from 1.0% to 3.0% for year-on-year growth in the first quarter. On a seasonally adjusted quarter-on-quarter basis, the median estimate from eight respondents was a marginal rise of 0.1%, with individual projections spanning a contraction of 1.0% to an increase of 0.9%.

Analysts pointed to weakening household demand and a marked decline in tourist arrivals as the principal drags on activity. "The drag on growth is likely to come from weaker consumption and lower tourism arrivals," said Jun Hao Ng, assistant economist at Oxford Economics.

Private consumption, a cornerstone of Thailand’s growth, has been under pressure amid elevated household debt and fragile consumer confidence. According to the poll’s contributors, consumption appears to have tapered off after a temporary lift from the government's co-payment programme, which ended in the fourth quarter of 2025.

Tourism showed clear signs of deterioration toward the end of the quarter. Official figures in the poll indicated tourist arrivals fell 1.8% in February and then dropped 8.7% in March. Bank of Thailand Assistant Governor Chayawadee Chai-anant noted that tourism from Gulf countries fell to close to zero in March, as attacks from Iran led to the closure of regional airports. Travel from Malaysia also softened, with higher fuel costs cited as a deterrent to road travel into Thailand.

Despite those headwinds, external demand remained a bright spot. Exports, particularly of electronics tied to artificial intelligence applications and data centre equipment, continued to post robust gains. Exports surged 18.7% in March from a year earlier to $35.16 billion, marking the 21st consecutive month of growth. For the first quarter overall, shipments rose by nearly 18%.

"Even though exports have been quite strong for several quarters, one would imagine that base effects would have started to challenge the strength of growth rates, but they are still going strong," said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.

However, several economists cautioned that export strength alone may not be sufficient to offset broader weakness in the economy in coming quarters. "After a resilient first quarter, second-quarter growth will be a different story," said Erica Tay, director of macro research at Maybank. Tay highlighted that the effects of supply disruptions on industrial, agricultural and fishery sectors were likely to become more visible, along with the impact of flight disruptions on tourism-related activities.

Looking ahead, an earlier poll conducted last month of economists expected Thailand’s economy to expand 1.3% in the current quarter, with average annual growth for 2026 projected at 1.6%. The central bank has recently trimmed its own 2026 growth forecast to 1.5% from a previous 1.9%.


Contextual note - The figures and quotations in this report reflect the results and commentary collected in a May 8-14 poll of economists and official tourism and export data referenced within that same reporting window.

Risks

  • Continued weakness in private consumption amid high household debt and fragile confidence could depress domestic demand further. - This risk primarily affects consumer staples, retail, and services sectors.
  • Ongoing flight disruptions and regional security incidents may keep tourism flows suppressed, reducing revenues for hotels, airlines, and tourism-reliant businesses. - This risk concentrates on hospitality, transport, and local retail.
  • Supply disruptions in industrial, agricultural and fishery sectors could weigh on output and exports, undermining manufacturing and commodity-related market performance. - This risk affects industrial manufacturers, agribusiness, and related export businesses.

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