Monthly economic update: September 2026
Executive summary
Global Economy
- Global economic activity remained resilient, with August PMIs pointing to the strongest expansion in over two years, led by robust services growth and sustained AI-related investment. Meanwhile, rising energy prices and escalating Middle East tensions increased inflation risks.
- US economic data support a hawkish Fed outlook as the labor market remains solid and inflation stays elevated. Meanwhile, China’s recovery remains uneven as domestic demand stays weak.
- The Fed, ECB, and BoJ all raised rates, while the BoE maintained a tightening bias despite holding rates unchanged. In Asia, policy paths are increasingly diverging, with the BoK and BSP leaning toward further tightening, while other regional central banks remain on hold.
Domestic Economy
- In July 2026, overall economic activities expanded compared to the previous month. Private consumption increased, partly supported by government stimulus measures and long-haul tourist arrival recovery. Moreover, exports and private investment continued to expand, driven primarily by technology-related products. Industrial production activities also rose slightly across several sectors.
- The headline inflation (CPI) in August 2026 accelerated from the previous month. This was mainly driven by elevated domestic fuel prices due to escalating geopolitical tensions and lower fuel fund subsidies. Meanwhile, prepared food prices continued to rise broadly, as partly from government stimulus. Fresh food prices also increased due to stronger domestic demand and adverse weather conditions that reduced agricultural output, resulting in accelerating core inflation.
- The Monetary Policy Committee (MPC) voted unanimously to maintain the policy rate at 1.00% in the meeting of 4/2026. The Committee assesses that Thailand's economic growth remains broadly in line with previous projections, although the recovery continues to be modest and uneven across sectors. Inflation has remained below earlier expectations but is expected to gradually increase over the remainder of this year and into early next year.
Financial Market
- US Treasury yields rose in a bear-flattening move, with the front-end leading gains following the Fed’s latest rate hike, while the 10Y Treasury briefly touched 5.0% amid elevated inflation risks, Middle East tensions, and fiscal concerns. Thai government bond yields also increased, particularly at the long end in line with global yield trends.
- The US dollar strengthened on a more hawkish Fed and rising Middle East tensions, while the Thai baht weakened past 33.00 against the greenback. In contrast, the Thai baht weakened alongside regional currencies, slipping past 33.00 against the US dollar amid broad-based dollar strength.
--------------------------------
