Geopolitical Shocks Test Thailand’s Mid-Market as Confidence Softens Further in Q1 2026
The outbreak of war in Iran has dealt a further blow to mid-market business confidence as Thailand enters 2026, compounding domestic and structural pressures that have already set the country apart from its more resilient ASEAN neighbours. According to Grant Thornton’s latest International Business Report (IBR) for Q1 2026, only 19% of Thai business leaders express strong confidence in economic improvement - down from 31% in the prior quarter - as uncertainty rises and the gap between Thailand and the region continues to widen.
Southeast Asia’s Growth Diverges in 2025, But Ends the Year on a Stronger Note
Southeast Asia closed 2025 on a broad-based high note, with growth accelerating in almost all countries in Q4. Vietnam solidified its position as the region’s standout performer, lifting its full-year growth to 8.0% - the highest annual rate since 2011. Malaysia surged to 6.3% in Q4, Singapore reached 6.9%, and Indonesia posted its fastest growth in over two years at 5.4%. The Philippines was the notable outlier, decelerating sharply to 3.0% - its weakest since COVID-19 - as domestic headwinds weighed on confidence.
Thailand also recovered from its weakest quarter since 2021 - just 1.2% in Q3 - to reach 2.5% in Q4, with all sectors posting growth for the first time that year. Yet for the full year, Thailand expanded by only 2.4%, well below every other major economy in the region, underscoring the structural work still required to close the competitiveness gap.
It is against this backdrop of regional divergence that Thailand’s business sentiment has softened most sharply. While neighbours accelerated, Thailand’s mid-market entered 2026 carrying the weight of both external shocks and unresolved domestic challenges - a combination that is testing the resolve of business leaders across every sector.
Ian Pascoe, CEO & Managing Partner, Grant Thornton in Thailand, commented:
“Thailand’s mid-market is navigating one of the most demanding operating environments in recent memory. The war in Iran is the latest in a series of external shocks that businesses must absorb, and it comes at a time when domestic pressures have not yet eased. But this is not a moment for inaction. The fundamentals that will determine Thailand’s competitiveness - technology adoption, talent development, and operational resilience - cannot be deferred. The businesses that emerge strongest from this period will be those that have used uncertainty as a catalyst rather than a reason to wait.”
Recalibration, Not Retreat
Across Asia, the energy exposure created by the Strait of Hormuz closure varies significantly - but Thailand’s position is among the most acute. Sourcing approximately 60% of its oil from the Middle East, Thailand sits above the Asian average and faces direct upward pressure on energy and logistics costs at a time when business confidence is already fragile. For an economy where exports and tourism are the primary growth engines, sustained disruption to this supply chain represents a material risk to the 2026 outlook.
Asia’s Uneven Exposure to the Strait of Hormuz Closure
It is this exposure that makes the current period particularly testing for Thailand’s business community. Yet the response from mid-market leaders has been one of measured recalibration rather than retreat - a recognition that the structural investments required for long-term competitiveness cannot be deferred simply because the near-term environment is difficult.
Into this environment, the war in Iran has introduced a fresh layer of global disruption - driving up shipping costs, dampening order books, and adding to the geopolitical uncertainty already weighing on investment decisions. For Thailand, an economy heavily reliant on exports and tourism, these pressures are particularly acute. Layered on top are longer-standing structural vulnerabilities: a rapidly ageing population, tightening labour supply, high household and corporate debt, and persistent productivity constraints that continue to hinder competitiveness.
Despite softening sentiment, Thailand’s mid-market is not standing still. Technology investment remains comparatively resilient as businesses increasingly recognise artificial intelligence and digital tools not as optional enhancements but as strategic necessities. The challenge - and the opportunity - lies in converting Thailand’s record FDI pipeline and growing technology agenda into the productivity gains that will ultimately close the gap with regional peers
Chris, Chairman, Grant Thornton in Thailand, added:
“Periods of sustained uncertainty test not only economic strength but the quality of leadership. What we are seeing across Thailand’s mid-market is a business community that is recalibrating thoughtfully - balancing short-term caution with the long-term investments that will determine future competitiveness. The foundations are there: strong investor conviction, a growing technology agenda, and a workforce that can adapt. The task for leaders now is to act with discipline and clarity of purpose, even when the external environment offers neither.”
About Grant Thornton in Thailand
Grant Thornton in Thailand is one of the world’s leading organisations of independent assurance, tax and advisory firms. Established in 1991, Grant Thornton combines global reach with deep local market expertise to support clients across diverse industries and help them capture growth opportunities.
For media inquiries, please contact:
Rattanakorn Sutthiphongkait
Marketing Communications and Branding Manager
Grant Thornton, Thailand
E: rattanakorn.sutthiphongkait@th.gt.com
W: grantthornton.co.th
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Rattanakorn (KJ) Sutthiphongkait Marketing professional with 14+ years of experience in branding, digital marketing, and strategic communications. Currently Marketing Communications and Branding Manager at Grant Thornton Thailand, driving brand visibility and stakeholder engagement. Former Strategic Partnership Manager, leading value-driven collaborations and business growth.Let’s connect and explore opportunities to collaborate!