K-Research sees H2 nadir, then a stimulus rebound

US tariffs remain a risk for exports

Kasikorn Research Center (K-Research) expects the Thai economy to bottom out in the second half of this year, gradually recovering in the third quarter driven by government stimulus measures.

Despite this assessment, K-Research maintained its 2026 GDP growth forecast at 2%, citing heightened uncertainties, said deputy managing director Nattaporn Triratanasirikul.

The government’s stimulus package under the 400-billion-baht emergency loan decree is expected to contribute 0.3-0.5 percentage points to GDP growth this year. The measures are anticipated to provide the greatest support to the economy in the second half of the year.

“However, economic risks remain, primarily stemming from uncertainty surrounding US tariff policies, which could affect Thailand’s export sector for the remainder of the year, as well as developments related to a potential US-Iran peace deal,” she said.

Even if the US and Iran reach a peace agreement, uncertainties are likely to persist, while pressure on global energy prices may not ease quickly. As a result, higher producer costs are expected to continue being passed on to consumers, causing headline inflation to peak in the second half of 2026.

K-Research forecasts headline inflation to average 3.1% this year.

Given the elevated uncertainties, the Bank of Thailand’s Monetary Policy Committee is expected to keep the policy rate unchanged at 1% throughout the year.

Regarding the baht, K-Research forecasts it to weaken against the US dollar over the remainder of the year, reaching 32.80 per dollar by year-end.

Kevalin Wangpichayasuk, another K-Research deputy managing director, said the impact of the Middle East conflict on the business sector is likely to become more evident in the second half of the year.

While there are positive signs following a potential US-Iran peace deal, a full normalisation of conditions is expected to take time.

Manufacturing output across most industries is projected to weaken on a year-on-year basis, primarily due to rising energy and petrochemical feedstock costs, the impact of US tariffs, and intense competition from imported goods, she said.

“These factors are expected to cause the Manufacturing Production Index to contract by 0.5% in 2026, marking the fourth consecutive year of decline,” Ms Kevalin said.

Meanwhile, Thanyalak Vacharachaisurapol, another deputy managing director at K-Research, said the organisation revised its forecast for total loan growth in the banking sector this year to 0.5%, expanding from a 0.7% contraction.

Loan growth is expected to be driven by lending to large corporations and the public sector, which is projected to expand by 5% this year. However, loans to small and medium-sized enterprises and retail borrowers are expected to contract by 4.5% and 1.5%, respectively.