The Thai Chamber of Commerce revealed that diesel prices have surged by 14.30 baht per liter, with 10 major business sectors severely affected, especially the transportation sector. This has driven inflation up to 4.56%, caused private consumption to vanish by nearly 100 billion baht, and dragged GDP down by 0.56%. Additionally, there is a looming crisis involving shortages of plastic pellets and chemical fertilizers. It is expected that if the Middle East situation continues throughout the year, the Thai economy faces the risk of stagflation.
Mr. Wichian Kaewsomboon, Director of the Trade Strategy Institute at the University of the Thai Chamber of Commerce, disclosed the economic impact of the diesel price increase, stating that the institute has assessed the effect of the diesel price rise of 14.30 baht per liter, reaching 44.24 baht per liter on 2 April 2026, representing a 48% increase after a 15-day price freeze ended.
The top 10 sectors most impacted due to their heavy reliance on diesel fuel are:
1. Maritime transport
2. Synthetic rubber and petrochemical production
3. Air transportation
4. Plastic product manufacturing
5. Land freight transport
6. Electricity generation
7. Yarn spinning 8. Coastal and inland water transport within the country
9. Land transport (appears again, possibly a duplication or referring to different segments)
10. Fluoride mining
Meanwhile, Thailand is facing a crisis involving plastic pellets and chemical fertilizers, due to the closure of the Strait of Hormuz, which prevents imports from the Middle East. It is estimated that domestic stocks will last only until the end of April. This will affect products heavily dependent on plastics and impact the cultivation of key economic crops such as rice, oil palm, animal feed corn, cassava, sugarcane, various fruits, and also affect exports of these agricultural products.
Additionally, it was found that the diesel price increase of 14.30 baht per liter has caused Thailand’s overall inflation rate to rise by 4.56%. Every 1 baht increase in diesel price raises inflation by 0.32%. This has pressured private consumption to decrease by 97.52 billion baht, while the gross domestic product (GDP) has fallen by 0.56% over one year. Each 1 baht increase in diesel prices reduces GDP by 0.04%.
“The diesel price rise not only increases production costs for producers and operators (Cost-Push Shock), forcing product price hikes that impact consumers, but also erodes consumers’ purchasing power and pressures private consumption (Demand-Pull Shock). This situation has become a Couple Shock affecting Thailand’s economy through both producers’ pricing and reduced consumer demand.”
However, the institute evaluated three scenarios: In cases 1 and 2, if the Middle East conflict ends within 3-6 months, with a 45% likelihood, overall inflation would rise to between 1.91% and 2.82%, within this year’s target range of 1-3%. GDP impacted by price increases alone would decline by 0.14-0.28% from an original 2% growth forecast, with overall GDP dropping by 1.07-2.31%. In scenario 3, if the situation persists throughout the year (10% chance), inflation would surge to 3.67%, GDP directly affected by diesel price rises would fall by 0.47%, and overall GDP would decline by as much as 3.24%.
Mr. Wichian further commented on the risk of stagflation—simultaneous economic stagnation and high inflation—in Thailand, saying that there is a risk if the Middle East situation ends within six months. Although early signs indicate inflation will rise this year, it has not yet shown sustained quarterly increases. GDP is expected to slow but not fall clearly below potential. The government can still intervene with policies. However, if the crisis drags on, the significant diesel price rise will further increase inflation, weaken purchasing power, and cause economic contraction, possibly increasing unemployment and causing stagflation.
He also offered policy recommendations to the government:
1. Oil: Support transportation operators through subsidies and reduce empty trips.
2. Electricity: Control automatic fuel adjustment charges (FT) to avoid secondary cost increases, and accelerate the reopening of Mae Moh power plant to add 600 MW capacity.
3. Plastic pellets: Secure naphtha/propane raw materials for plastic production and prioritize industries such as medical (medicines, saline bags, medical gloves), followed by food, packaging, and prevent stockpiling.
4. Fertilizers: Lock in forward purchase contracts, cap domestic prices at no more than 20% above pre-crisis levels with government compensation for the difference, and encourage farmers to reduce chemical fertilizer use.
Meanwhile, Mr. Thanawat Polvichai, President of the University of the Thai Chamber of Commerce and Chairman of the Economic and Business Forecasting Center, said that Thailand’s economy this year is unlikely to enter stagflation if the crisis ends in the second or third quarter. But if it extends into the fourth quarter, the economy could contract sharply with high inflation, making the problem difficult to resolve since it would be a global issue.
“The important issue is how the government manages oil, plastic pellets, and chemical fertilizers to avoid shortages and keep prices reasonable, and to compensate affected sectors such as transportation, agriculture, and fisheries so inflation impact is minimized. Price control policies must allow businesses to survive to maintain employment. Simultaneously, tourism and exports should be stimulated to generate national income. Regarding relief programs like the 'Khon La Khrueng Plus,' excessive spending may leave little central budget for future projects and pose economic risks.”
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