Thailand could face a period of stagflation if energy prices surge sharply amid escalating tensions in the Middle East, according to an economist at Siam Commercial Bank’s Economic Intelligence Centre (EIC). The warning comes as attacks on vessels and oil terminals in the region raise concerns over global oil supply disruptions. Higher fuel costs could weaken household purchasing power while slowing economic growth, creating a difficult economic environment.

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Dr Poonyawat Sreesing, Senior Economist at the EIC, said Thailand is particularly vulnerable to oil price shocks because the country is a net importer of energy. Each year, Thailand imports oil and gas worth around 8% of its gross domestic product, making the economy highly sensitive to rising energy costs. When oil prices climb, inflation typically increases while consumers and businesses face higher operating costs.

Thailand currently imports about 50% of its oil through the Strait of Hormuz, one of the world’s most critical energy shipping routes. In response to the growing geopolitical uncertainty, the Thai government has secured alternative supply sources including the United States and Malaysia. Authorities have also expanded national reserves to cover around 95 days of domestic consumption.

Energy and energy-related products account for roughly 12% of Thailand’s Consumer Price Index basket, meaning fuel prices have a significant impact on inflation. Dr Poonyawat said economic pressure could intensify if diesel prices rise to 32 baht per litre, compared with the current government price cap of 30 baht. Such an increase could push inflation higher despite the country’s current rate remaining below zero.

The economist said inflation could rebound to as high as 3% if energy prices continue rising. At the same time, global instability linked to the Middle East could disrupt trade, potentially weakening exports across Southeast Asia. Thailand’s export-driven economy may therefore face reduced overseas demand during the same period that domestic costs are increasing.

Thailand’s tourism sector could also feel the impact if oil prices remain volatile. Rising fuel costs would likely drive up airfares, increasing travel expenses for international visitors and potentially reducing tourist arrivals. Thai Airways has already announced plans to increase ticket prices by between 10% and 15% due to strong demand for flights and uncertainty over oil prices.

To limit the economic impact, Dr Poonyawat recommended the government adopt what he called a “3T” strategy: targeted, temporary and timely support measures. He said assistance should focus on vulnerable groups, including small and medium-sized enterprises and low-income households.

The Nation reported that temporary measures aimed at easing financial pressure on businesses would help prevent additional economic strain, he added. Timely government policies and subsidies could also help individuals and companies cope with potential oil supply shocks in the coming months.

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Adapted by ASEAN Now Nation 14 Mar 2026

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Looks like Thailand is facing a grey future. Expensive air tickets may lower the number of incoming tourists. Domestic debt and inflation rising means people can't spend.

It looks the future is grim.