"Pachara" A Securities and Exchange Commission (SEC) board member, Pachara, points out that GDP figures contradict the manufacturing production index, signaling danger and indicating the growth is not sustainable, warning the country is heading toward a precipice.
On 4 June 2026, Mr. Pachara Naripthapun, a board member of the SEC (Securities and Exchange Commission), spoke about the economic signals for the second quarter and the current fundamentals of Thailand's economic structure. Although GDP figures came out better than many expected, expanding by 2.8%, mainly driven by exports soaring 15.5%, nearly double the growth of the previous quarter, he noted that
While this sounds like a good sign, there remains concern that this initial positive figure may become dangerous going forward and could lull us into complacency in addressing the underlying structural problems that have been accumulating.
Certainly, part of the strong export growth this quarter results from front-loading exports ahead of the full implementation of U.S. tariff measures. In other words, we are borrowing from the future, not achieving sustainable growth. When this front-loading effect ends in Q2, the figures will reflect reality more accurately. More important than GDP numbers is the abnormal disconnect between exports and the Manufacturing Production Index (MPI), which measures actual production volumes from domestic factories.
Data from the Office of Industrial Economics shows that MPI in Q1 2026 grew only 0.83% year-on-year. Capacity utilization remains at 61.26%, hovering between 57–61% for several consecutive quarters since 2024, without significant recovery. Meanwhile, exports grew 15.5% over the same period, leaving a large gap between the two figures. Notably, the industries boosting the MPI this quarter are all primary commodity products.
Even the Secretary-General of the National Economic and Social Development Council admitted earlier this year that although exports increased, MPI and capacity utilization did not improve as expected. Under normal conditions, if imports of capital goods and raw materials increase for production, MPI should rise by at least 3–5%, but this did not happen. This suggests some exports may be mere pass-throughs without domestic production or value addition. While some believe that if manufacturing weakens, tourism and services can compensate, I believe that faith is proving false.
Previously, although it appeared that services compensated for industry, most of these services were tourism-related, which faces key limitations that industry does not: tourism cannot be exported, lacks foreign competition pressure to improve productivity, and can only grow within limited bounds.
Currently, the services sector accounts for 62% of GDP, but most services are low-value compared to high-value services in developed countries. This excludes tourism, which is overly burdened with driving economic growth. At the same time, the sector faces a digital deficit from foreign platform service fees paid monthly by Thai people, a silent, accumulating permanent burden each year.
The most worrying figure now is not GDP but the current account balance. In 2025, Thailand still had a surplus of $15.9 billion, but in April 2026 alone, the current account ran a deficit of $7.6 billion, leaving a cumulative deficit of $4.4 billion from the start of 2026 to April. Most of this stems from unusually high imports of electronic parts and oil. Many say this is a case of premature deindustrialization occurring before the country escapes the middle-income trap—that is, the current structure is losing much before becoming truly prosperous.
This structure is negative deindustrialization, meaning that the industrial sector is shrinking not due to productivity gains requiring less labor, but because of losing competitiveness to key trade partners. Meanwhile, the services sector replacing it is low-value, unable to create a self-sustaining growth cycle, and much harder to recover than other forms of deindustrialization.
Based on data from both manufacturing and services, which do not provide the foundation needed under current import-export conditions, I assess that the economy in Q2 will face three main simultaneous pressures.
The first is exports slowing down after the end of front-loading effects, combined with intensified competition from China, which now produces over 30% of the world's goods and is exporting cheap products to markets Thailand once dominated, as well as impacts from recently announced U.S. tariff measures under Section 301 authority.
The second is volatile energy prices due to Middle East conflicts. The National Economic and Social Development Council estimates that if the conflict lasts 6–9 months, oil prices could spike to $135–145 per barrel, causing Thai GDP to contract to just 0.2% with inflation at 5.8%.
The third is the Purchasing Managers' Index (PMI), a forward-looking indicator. Although the manufacturing PMI in March 2026 was 54.1, the highest in three months, confidence in future production dropped to its lowest level in nearly four and a half years due to concerns about the Middle East war.
It seems the government is trying to restructure industry around demand, infrastructure, investors, and human resources, though sometimes these efforts appear insufficient or excessive because bureaucracy does not facilitate easy and flexible management. Despite GDP and export growth, MPI and capacity utilization have not increased accordingly; the service sector and current account balance have rapidly turned negative; and the industries lifting MPI are primary commodities, not high-value ones. These favorable figures hide more serious warning signs for the country’s challenges. The question for Q2 is not just how high GDP will be, but that we are steadily losing the country's economic engine without real replacement. This is likely not a temporary crisis but a structural problem requiring urgent policy solutions.
However, restructuring and industrial production improvement are urgent necessities. People talk a lot about complexities and challenges but offer few solutions. The commitment to creating solutions should include removing investor obstacles, reshaping the industrial landscape, and developing human capital to supply industries—approaches that have not been seen for a long time.