Thai and Japanese Economies Slow Due to Household Consumption; How About Indonesia?

Thailand's economic growth decelerated to 1.9% year-on-year in the second quarter of 2026, a notable slowdown from the 2.8% recorded in the prior quarter. This cooling is largely attributed to a dampening effect on household consumption, driven by elevated levels of household debt and the rising cost of living.

Danucha Pichayanan, head of the National Economic and Social Development Council (NESDC), noted that the second quarter's performance was significantly impacted by the conflict in the Middle East. Despite the slowdown, the growth still surpassed market expectations of 1.7%. However, on a quarterly basis with seasonal adjustments, the Thai economy actually contracted by 0.2% between April and June.

"The economy is expected to grow stronger in the third quarter compared to the second quarter, which was quite affected by the conflict in the Middle East," Pichayanan stated at a press conference on Monday, August 17. He indicated that the economy is projected to rebound in the third quarter.

While private investment saw a robust increase of 13.4% and exports of goods also expanded, these gains were insufficient to significantly boost overall economic growth. The Thai government has consequently revised its economic growth projection for 2026 upward to a range of 2% to 2.5%, from a previous forecast of 1.5% to 2.5%.

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The economy is expected to grow stronger in the third quarter compared to the second quarter, which was quite affected by the conflict in the Middle East.