Thailand's central bank decided to keep the current policy rate unchanged at 1% amid increasing uncertainty arising from the Middle East war, according to minutes from the Monetary Policy Committee meeting held April 24 and 29.
The conflict in the Middle East has led to a significant rise in energy prices globally, a negative impact on the travel industry, and logistics issues, including shortages of raw materials. The Thai economy, along with other Asian economies, has been severely impacted due to a high dependence on energy and commodity imports from the Middle East, the minutes revealed.
Under the baseline scenario in which the situation improves in the first half of 2026, the central bankers now expect Thailand's economy to expand at a slower pace of 1.5% and 2%, respectively, in 2026 and 2027, according to the minutes.
Overall credit growth is also expected to remain subdued in 2026 as financial institutions remain cautious with lending.
Headline inflation is projected to increase to an average of 2.9% in 2026, followed by a drop to 1.5% in 2027.
The country's economy faces heightened risks due to the potential of prolonged war and continued supply disruptions.
The committee believes the challenges arising from the war can be addressed through a coordinated policy mix, including monetary policy, fiscal policy, and targeted financial measures.
"The Committee maintained that consumption-based stimulus offered only transient economic support. Instead, policy should prioritize structural transformation and the preservation of fiscal space given the prevailing global uncertainty," the minutes stated.