Monthly economic update: April 2026
Executive summary
Global Economy
- Global economic data, including PMIs and CPI readings, are beginning to reflect the impact of Middle East tensions. While the tensions show early signs of easing through a ceasefire, uncertainty remains elevated. The key focus continues to be vessel traffic through the Strait of Hormuz.
- In major economies, the US shows softer momentum with inflation starting to pick up, while the labor market remains solid. In China, recent data suggests softening, though Q1 GDP still beat expectations.
- On monetary policy, most central banks are adopting a wait-and-see approach, likely keeping rates steady at their April meetings, particularly across the G10, although markets still price a more hawkish tilt later this year. In Asia, most central banks tend to follow G10 policy direction.
Domestic Economy
- In February 2026, overall economic activity continued to decline from the previous month, as reflected by lower private consumption indicators. The external demand also marked a slowdown, led by lower number of tourist arrivals and merchandised trade. Meanwhile, private investment indicators increased thanks to higher import of machinery and equipment as well as higher investment in construction.
- Rising Middle East geopolitical tensions trigger ‘structural supply shock’. Initially, a first‑round energy supply shock—lifting oil and naphtha prices—and a second‑round supply‑chain shock, pushing up chemical mid-stream products and other energy‑intensive materials, with cost pressures cascading into construction materials and industrial metals.
- Supporting government measures in handling the tensions implemented so far total THB 7.7 billion covering cost‑of‑living relief for households and transportation service providers, and partial energy price subsidies during periods of exceptionally high global energy prices, on one hand, emergency borrowing of THB 500 billion would expand short‑term fiscal capacity while maintaining public debt within the 70%‑of‑GDP ceiling.
Financial Market
- In global financial markets, sentiment has turned positive as volatility eases after the US–Iran ceasefire announcement, despite ongoing uncertainty over negotiations. US Treasury yields declined across the curve; however, yields remain elevated relative to pre-conflict levels. Meanwhile, Thai bond yields are influenced by fiscal concerns.
- FX markets are driven by Middle East tension headlines. The dollar pared some earlier gains as sentiment improved, prompting corrections in major and regional currencies, including the Thai baht. Looking ahead, with uncertainty over the conflict still elevated, the dollar is expected to remain resilient in Q2, leaving the baht exposed to depreciation risks over the coming months.
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