Monthly economic update: May 2026
Executive summary
Global Economy
- Recent global economic data continues to show resilience, though the outlook remains challenging amid persistent Middle East tensions. On price pressures, global inflation has risen across economies, driven largely by higher oil prices. Soft data also point to increasing input costs and renewed supply chain delays.
- In major economies, the US faces greater inflation risks. Meanwhile, China economy start to show more sign of economic slowdown amid ongoing middle east tensions. For Asian economies, strong tech-related demand remains a key theme across the region, continuing to support exports.
- On monetary policy, Middle East inflation risks put central bank hikes back in focus especially for DM central banks. For Asia, The PBoC is expected to maintain an easing bias despite Middle East risks, while other Asia’s monetary policy outlooks are highly dependent on oil prices.
Domestic Economy
- Overall economic activity relatively stable from the previous month, as reflected by lower consumption and investment, driven by accelerated growth in the prior periods and partly due to lower number of tourist arrivals. Meanwhile, merchandised export growth elevated regarding US shipment due to AI-related demand alongside with a temporary boost from the short-term easing of US tariff measures.
- In Q1/2026 Thailand GDP growth accelerated from the previous quarter and dramatically higher than market expectation. The major attribution was relatively broad-based including domestic and external demand. Overall consumption and investment continued to grow, while exports of goods and services also accelerated. In addition, NESDC maintained the GDP growth forecast of 2026 to grow 1.5-2.5% (mid-range 2%).
- Looking ahead, ttb analytics projected Thai economic growth to slow in 2026, amid a more severe and prolonged-than-expected Middle East conflict. The situation has driven up global energy prices and disrupted key supply chains, transmitting impacts to the Thai economy through multiple channels—particularly tourism, exports, and weakening purchasing power. Nevertheless, additional government support measures are expected to provide a positive boost.
Financial Market
- Bond market volatility surged this month, with global yields rising sharply—particularly at the ultra-long end, which reached multi-year highs. The move appears driven by a repricing of inflation risks as Middle East tensions keep oil prices elevated, raising concerns over broader inflationary pressures. Meanwhile, Thai bond yields rise, tracking broader global trends, with the curve steepening likely to persist.
- The dollar remains resilient, supported by persistent tensions in the Middle East. Meanwhile, most Asian currencies remain under pressure due to their exposure to energy imports. The Thai baht has broadly tracked regional peers but remains below the 33.00 level. Looking ahead, FX markets are likely to remain driven by developments in Middle East tensions. Persistent tensions leave the Thai baht at risk of depreciation in H2, driven by elevated oil prices.
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