As Thailand prepares to host the 2026 IMF-World Bank Annual Meetings, it finds itself at an economic inflection point. As the second-largest economy in the Association of Southeast Asian Nations (ASEAN) after Indonesia, it remains one of the region’s most sophisticated manufacturing and service economies, with an established automotive industry and growing electronics and digital services. Yet these advantages have not translated into stronger growth.
Although Thailand’s economy has expanded by an annual average of 3.2 percent over the past twenty-five years—a little faster than the global average of 3 percent—growth is expected to slow sharply to around 1.5 percent in 2026 and 2.1 percent in 2027. This slowdown reflects Thailand’s heavy dependence on imported energy and urea from the Middle East, as well as its heavy reliance on trade with China, leaving it vulnerable to disruptions caused by the Iran war, intensifying US-China competition, and growing fragmentation in global trade and supply chains.
Domestic pressures are adding to the strain. Household debt of nearly 90 percent of GDP, an aging population, and weaker tourism and domestic consumption are creating further headwinds, constraining growth and leaving Thailand more exposed to external shocks.
Geoeconomic fragmentation as a risk factor
Thailand’s deep integration into global trade has been central to its success. But it has also left the country increasingly exposed to shifts in supply chains and geoeconomic relations. With trade exceeding the size of its economy for much of the past twenty-five years, reaching nearly 140 percent of GDP in 2025, Thailand sits at the intersection of supply chains linking China, the United States, ASEAN, and Japan. In 2025, approximately 18 percent of its merchandise exports went to the US, making it the country’s largest individual export market, while China remains its largest trading partner and a critical source of intermediate goods.
Until recently, Thailand could leverage these ties to benefit from trade with both countries. But growing geoeconomic fragmentation, fueled by US-China competition, is increasingly putting that position at risk. US tariffs on Thai goods are now estimated at roughly 20 percent, while greater scrutiny of Chinese investment, rules of origin, transshipment, and Chinese content in third-country exports threatens the very supply-chain model from which Thailand benefited. The IMF expects tariffs to weaken Thai exports through direct export losses, supply-chain disruptions, softer US demand, and weaker investment sentiment. The risks are particularly acute for electronics, electrical equipment, automobiles and electric vehicles (EVs), machinery, and other industries built around cross-border production networks.
Thailand therefore faces a strategic challenge that goes beyond simply attracting multinational companies seeking to diversify production. The larger task is to increase domestic value added, diversify export markets and sources of critical inputs, and ensure that new investment deepens local production capabilities rather than reinforcing its dependence on supply chains exposed to trade restrictions and other geoeconomic shocks.
From an assembly hub to a higher-value economy
Manufacturing remains Thailand’s greatest economic strength, accounting for approximately 16 percent of employment—or 6.2 million jobs—and 25 percent of its GDP. The challenge now is to use that industrial base to move further up the value chain. The automotive transition is particularly important. Thailand is Southeast Asia’s leading automotive production center and could leverage its existing supplier networks to expand into EVs, batteries, power electronics, and advanced components. However, Bangkok’s push into higher-value EV and battery production is deeply tied to Chinese supply chains, exposing the industry to escalating US-China trade and geopolitical tensions.
Green manufacturing offers another path to higher-value production. Energy-efficient and green goods already account for nearly 10 percent of Thailand’s exports, giving the country an industrial base on which to build as global demand shifts toward more energy-efficient and lower-carbon products—especially amid recent hikes and volatility in global energy prices resulting from conflicts in the Middle East and Russia’s invasion of Ukraine. But Thailand’s green industries face many of the same vulnerabilities as its automotive sector: EV and solar manufacturing remain deeply tied to Chinese supply chains, while tougher US enforcement against tariff evasion and transshipment has exposed Thai producers to greater scrutiny, stricter origin requirements, and the risk of abrupt factory closures.
Digital infrastructure may offer a less established but potentially transformative opportunity. In 2025, Thailand received applications for thirty-six data-center projects worth more than $23 billion from Western, Chinese, Singaporean, and Thai firms, strengthening its position as an emerging regional hub for cloud and AI infrastructure. But this sector is also becoming entangled in US-China technology competition. As Washington tightens controls on advanced AI chips and scrutinizes Chinese access to computing capacity through third countries, Thailand will need to attract investment from both sides without sacrificing access to critical technologies and global markets.
Investments in these sectors could position Thailand as a leading Southeast Asian hub for advanced manufacturing, clean energy, electronics, digital services, AI, and cloud computing. Realizing that potential, however, will depend on how effectively Bangkok can navigate deepening US-China geoeconomic fragmentation while managing growing pressure on its energy and water resources and addressing growing structural constraints at home.
Debt, demographics, and tourism headwinds
Thailand’s strong track record in manufacturing and recent surge in investment in the digital economy mask significant structural weaknesses. Most notably, the country is aging rapidly, shrinking its future workforce and increasing pressure on pensions, healthcare, and public finances. At the same time, an aging population is weighing on productivity and aggregate demand.
Moreover, household debt remains exceptionally high, at nearly 90 percent of GDP, constraining consumption and limiting households’ capacity to borrow, invest, purchase homes, or start businesses, while also exposing domestic financial institutions to heightened solvency and liquidity risks. Weak productivity growth compounds these pressures.
Tourism presents a similar challenge. Thailand remains one of the world’s leading destinations, but international arrivals weakened in 2026, falling 3.2 percent year-on-year in the first half amid geopolitical and economic uncertainty. Consequently, two economic stories are unfolding simultaneously: record investment in industries of the future, alongside weak productivity growth. Bridging the two will be critical.
Turning investment into lasting value
The 2026 IMF-World Bank Annual Meetings offer Thailand an opportunity to build confidence in the next stage of its development and growth. The timing is particularly relevant. The official agenda will address issues directly connected to Thailand’s growth prospects over the next decade, including global growth and financial stability, development finance, private-capital mobilization, digitalization and AI, jobs, and sustainable development.
Thirty-five years after Thailand last hosted the meetings in 1991, it should use the global spotlight to advance three priorities: accelerating the transition to advanced and green manufacturing, building the skills and digital infrastructure needed for an AI-intensive economy, and tackling structural constraints such as household debt, population aging, and weak productivity. Across all three, Thailand will need to navigate intensifying US-China competition without becoming overly dependent on any single market, technology ecosystem, or source of investment.
The measure of success should not be the amount of investment Thailand attracts, but the value it creates at home. Geopolitical competition can give Bangkok an opportunity to diversify its markets, technologies, and sources of capital while attracting knowledge, skilled jobs, and greater domestic value creation. If Thailand can capture those gains while preserving access to major markets, it can leverage its established services, industrial, and digital base to become a more productive, innovative, and resilient economy.
Amin Mohseni-Cheraghlou is a senior consultant with the Atlantic Council’s GeoEconomics Center, a senior lecturer in economics at American University, and a faculty affiliate at Columbia University.
At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.
Further reading
Fri, Aug 14, 2026
Indonesia has all that it takes to move up the value chain
Econographics By Amin Mohseni-Cheraghlou
Ahead of the 2026 IMF-World Bank Annual Meetings, Indonesia has a chance to showcase its growing economic clout. The challenge is turning its natural resources, young population, and strategic position into lasting productivity gains.
Wed, Jul 29, 2026
ASEAN does not need decoupling. It needs coordinated resilience.
Dispatches By Nik Foster
If the group of Southeast Asian nations does not craft its own path of economic resilience, then it will end up importing the industrial policies of its larger neighbors.
Tue, May 12, 2026
The IMF’s policy advice needs a louder voice
Econographics By Martin Mühleisen
At a time of energy shocks and trade tensions, the IMF’s surveillance work is more relevant than ever. Yet its challenge remains influence: can the Fund move from rigorous analysis to public-facing policy advice?