CIMB Thai forecasts Q3 economic recovery, 2026 GDP growth target still 2%

The Thai economy is showing signs of recovery in the third quarter of 2026, after hitting its lowest point in the previous quarter, though long-term growth remains capped at 2% without serious structural reforms, according to CIMB Thai Bank (CIMBT).

Amornthep Chawla, executive vice president and head of the research office at CIMBT, revealed yesterday that the bank maintains its 2026 gross domestic product (GDP) growth forecast at 2%.

While Q2 GDP is expected to expand by a mere 1.8% year-on-year and contract 0.5% quarter-on-quarter due to the Middle East conflict and surging oil prices, Amornthep dismissed fears of a technical recession, citing a Q3 driven rebound, driven by exports, investment and government support measures.

The bank highlighted key economic factors for the third quarter. First, global crude prices have eased to an average of US$80 per barrel from peaks above $100 in Q2, providing a much-needed tailwind.

On monetary policy, the US Federal Reserve is expected to hold interest rates at 3.75% for the rest of the year, while the Bank of Thailand is anticipated to maintain its policy rate at 1%, as inflation pressures remain cost-pushed rather than demand-driven.

CIMBT warned, however, of significant downside risks, particularly a potential new trade war if the United States re-imposes protectionist measures, which would hit global trade and Thai exports severely.

Meanwhile, the Thai baht is projected to strengthen to around 33.10 baht to the US Dollar in Q3, fuelled by capital inflows and the Fed’s paused rate cycle.

Amornthep emphasised that Thailand's growth engine is shifting, with private investment poised to outpace GDP growth and replace private consumption as the primary driver. Domestic spending continues to face severe headwinds from high household debt, sluggish income growth and weak purchasing power.

CIMBT urged the government to focus on long-term fiscal discipline and strategic investment, rather than short-term cash handouts.

The bank advised keeping public debt well below the 70% GDP ceiling over the next two to three years, while accelerating infrastructure projects through public-private partnerships (PPPs) to create sustainable jobs.

“Over the next three to five years, Thailand’s annual growth is projected to hover between 2% and 2.5%, with the chance of exceeding 3% highly unlikely unless the country implements deep structural changes,” Amornthep explained.

Amornthep stressed that the government must urgently raise labour productivity and foster new target industries to boost the country's long-term potential.