Thailand’s economic growth is projected to expand modestly by one point eight percent in 2026, according to the World Bank’s latest East Asia and Pacific Economic Update, underscoring persistent domestic and external headwinds that leave the kingdom trailing its Southeast Asian peers.

The forecast, revised in the October 2025 edition of the update, reflects subdued global demand, elevated policy uncertainty and structural impediments that have constrained Thailand’s recovery momentum since the pandemic. Despite this adjustment, the World Bank also lifted Thailand’s 2025 growth projection to two percent, from earlier, lower estimates, signalling some resilience in the near term.

The combined outlook positions Thailand among the slowest-growing economies in the Association of Southeast Asian Nations (ASEAN) next year, with projected growth lagging behind neighbours such as Indonesia and Vietnam, which are anticipated to register markedly higher expansion rates.

Analysts view the elevated growth differentials as a symptom of Thailand’s broader economic challenges, including weak export performance, soft domestic demand and the lingering impacts of external trade tensions.

The World Bank’s assessment attributes Thailand’s lower growth forecast in part to global economic headwinds, including slowing demand in major markets and rising protectionist pressures that have weighed on exports.

Domestic factors — such as subdued investment, demographic trends, and persistent structural constraints — also temper the outlook. While the modest revision for 2025 reflects some improvement in high-frequency activity indicators, the outlook for 2026 remains anchored at a relatively low level, consistent with other multilateral projections.

Policymakers have responded by emphasising the importance of structural reforms to boost productivity and competitiveness, including enhancements in digital infrastructure, workforce skills and investment promotion.

Thailand’s government has also underscored strategic initiatives to diversify trade partnerships and attract high-value foreign direct investment to stimulate sustainable long-term growth, even as near-term prospects remain constrained.

Economists note that expanding sectors such as technology, automotive components and tourism could help lift growth above baseline projections, provided appropriate policy support and global conditions improve.

However, the World Bank’s forecast highlights that without substantial structural change, Thailand will face ongoing pressure to close its growth gap with dynamic regional peers and realise stronger economic momentum in the years ahead.