SCB Economic Intelligence Center (EIC), a research centre under Siam Commercial Bank, expects energy costs will continue to propel inflation in the second half of the year even as the Middle East war shows signs of de-escalation.
Although tensions between the US and Iran have begun to subside, the Brent crude price is expected to remain elevated compared with the pre-war level. In the EIC's view, Brent is expected to average US$85 per barrel throughout 2026, potentially falling to $80 in the second half, according to chief economist Yunyong Thaicharoen.
Meanwhile, the domestic diesel price is projected to average 35 baht per litre this year, falling from a peak of 50.54 baht in April.
EIC slashed average headline inflation to 2.6% for 2026, down from 3.6%. Consumer prices are expected to decline by 0.8% next year, lower than the Bank of Thailand's target range of 1-3%.
Although oil prices remain above pre-war levels, their recent decline has helped alleviate pressure on businesses, particularly in the tourism sector, which is expected to recover strongly as lower travel costs support demand.
Exports and particularly electronics shipments continue to expand, supported by robust growth in foreign investment, he said.
Given the positive outlook, EIC upgraded its GDP growth forecast for 2026 to 2% from 1.5%, supported by the government's 200-billion-baht stimulus package including the "Thais Help Thais Plus" scheme.
GDP growth is estimated at 1.9% for 2027, with another 200 billion baht expected to promote an energy transition.
"The Thai economy is expected to grow at a subdued pace this year and next, despite fiscal support from the government through the 400-billion-baht emergency decree. This reflects fiscal policy space resulting in a limited contribution to GDP growth," said Mr Yunyong.
The research centre assessed the Monetary Policy Committee would keep the policy rate unchanged at 1% throughout 2026.
Inflationary pressures are expected to stem from supply-side factors, while long-term inflation expectations among households and businesses remain well-anchored, he said.
"Thailand's external stability remains robust, supported by ample international reserves, reducing the need to raise interest rates aggressively to contain inflation or currency depreciation, unlike other countries in the region," said Mr Yunyong.
Overall financial conditions remain tight, particularly for retail borrowers and small and medium-sized enterprises due to slowing income growth and continued caution among financial institutions in extending credit amid concerns over deteriorating asset quality and repayment capacity, he noted.
The EIC expects the global economy to expand by 2.5% and 2.6% in 2026 and 2027, respectively, with momentum continuing to come from investment in artificial intelligence, providing sustained benefits to electronics-producing economies.
Looking ahead, US import tariffs under Section 301 warrant monitoring as they pose a key risk to global trade in the second half, noted the think tank.
