Monthly economic update: October 2026
Executive summary
Global Economy
- The global economy continued to expand in September, with the Global Composite PMI reaching its highest level since December 2021. The IMF slightly upgraded its 2026 growth forecast to 3.1%, supported by AI investment and resilient domestic demand. However, geopolitical tensions and higher energy prices continue to weigh on the outlook. Meanwhile, rising energy costs are intensifying inflationary pressures and may limit central banks’ scope for monetary easing.
- US inflationary pressures are intensifying, while the labor market shows clearer signs of cooling. Meanwhile, China’s August data gained momentum as strong external demand which offsetting weak domestic demand. For monetary policy, central banks signal diverging rate paths amid rising inflation risks.
Domestic Economy
- Overall economic activities remained firm compared to the previous month. Moreover, exports and private investment continued to expand, driven primarily by technology-related products. Industrial production activities also rose slightly across several sectors. While private consumption indicators persisted, partly supported by government stimulus measures.
- The headline inflation (CPI) in September 2026 continued to accelerate from the previous month. The increase was mainly driven by elevated domestic fuel prices as higher global crude oil prices and intensified Middle East energy-security risks while fresh food prices increased as adverse weather conditions constrained some agricultural output. Meanwhile, core inflation edged up, suggesting a modest broadening in underlying price pressures
- The Monetary Policy Committee (MPC) voted unanimously to maintain the policy rate at 1.00% in the meeting of 5/2026 for the nine consecutive months, judging the accommodative stance appropriate to support a modest and uneven recovery. However, a more hawkish global monetary policy backdrop and associated THB depreciation pressures warrant close monitoring.
Financial Market
- US Treasury yields fell across the curve, led by the front end as softer labor data and benign inflation eased Fed tightening expectations, while safe-haven demand pushed the 10-year yield below 5%. Meanwhile, Thai bond yields remained tracking the global moves at the long end, while short-term yields stayed anchored on expectations that the BOT will keep rates unchanged through year-end amid an improving growth outlook.
- The U.S. dollar strengthened, with the DXY rising to an 18-month high as political and fiscal concerns in France weighed on the euro. While the Thai baht traded sideways alongside regional peers, pressured by the stronger U.S. dollar. Looking ahead, seasonal patterns and an improving domestic growth outlook could support baht appreciation toward year-end, although further declines in gold prices remain a key depreciation risk.
