BOT raises GDP growth forecast to 2.1% on stimulus boost

The Bank of Thailand (BOT) has revised its economic growth forecast for the year upward to 2.1%, citing the potentially positive impact of the government’s 400-billion-baht loan decree, while dismissing concerns that the country is entering a period of stagflation.

BOT Governor Vitai Ratanakorn stated today that the central bank’s latest assessment incorporates the government’s planned 400-billion-baht emergency borrowing.

The injection is expected to provide a 0.6% boost to the economy, lifting the overall GDP growth from the previous estimate of 1.5%, which had been based on a 300-billion-baht borrowing plan.

The growth outlook for 2027 has, however, been adjusted slightly downward to 1.6%, compared against the earlier forecast of 2%, due to a higher base effect from this year’s anticipated expansion.

Vitai added that “On the inflation front, the central bank now expects inflation to average 3.0% to 3.1% this year, up from the previous estimate of 2.9%. Inflation is projected to cool significantly to 1.4% in 2027, previously estimated at 1.5%.

The BOT Governor noted that April 2026 inflation stood at 2.89%, consistent with the BOT’s view that, while inflation may rise to 4-5% in certain months, it will gradually subside by the second quarter of next year.

Addressing rising economic concerns, Vitai categorically denied that Thailand is suffering stagflation, a condition characterised by stagnant growth coupled with high and persistent inflation.

"By definition, stagflation requires the economy to be in a slump while inflation remains high for a prolonged period," Vitai explained. "While inflation is currently elevated, we expect it to start trending downward in the second quarter of next year. Since it is not remaining high indefinitely, we are not in a stagflationary environment," he opined.

He added that, while the BOT is closely monitoring risks as global situations evolve, Thailand's inflation remains at the lower end of the spectrum compared against many other countries currently grappling with upward-bound inflationary pressures.