In early 2026, the Thai economy is experiencing extreme divergence between the growth of large industries and the slowdown of small businesses.
Data from the Thai Economic and Social Development Council for the first quarter of 2026 reveals a rare phenomenon: factory closures totaled 156 (an increase of 11.4%), outnumbering new factory openings which were only 139 (a sharp decrease of 63.9%). This marks the first time in 10 quarters, since late 2023, that closures have surpassed new openings.
However, amid the crisis lies opportunity. Regarding business expansion, 106 factories expanded operations, up 82.8%, with investment value soaring to 152.5 billion baht, a significant rise from just 8.5 billion baht in the same period last year.
Employment in large and medium factories reached 25,126 workers, accounting for 99.3% of the workforce in all expanding factories.
Emerging industries such as plastics, food, machinery, and electrical/electronics continue to expand steadily.
Leading investment was the machinery industry, topping expansion investments at 52.0 billion baht and adding 7,886 jobs.
Although overall exports and non-agricultural employment appear stable, small factories are showing vulnerability, especially in metal products and plant-based goods industries, affected by three main factors:
Reduced competitiveness: Thai traditional SMEs face declining product demand.
Rising production costs: impacts from higher raw material prices due to ongoing Middle East conflicts.
Prolonged Middle East conflicts and transport issues through the Strait of Hormuz have become risk factors worsening demand, particularly for key export products with high reliance on the Middle Eastern market, including:
Export product groups | Proportion dependent on Middle Eastern market |
Automobiles and components | 35.4% |
Air conditioners and components | 7.8% |
Rubber products | 4.6% |
Processed foods | 3.7% |
Computers and components | 3.5% |