Thailand's AI Boom Offers a Narrow Path to Higher Growth

By Daniel Okafor

Thailand's digital-sector investment applications reached 1.12 trillion baht in the first half of 2026, according to AMRO, exceeding the 746 billion baht recorded for all of 2025.

The Asean+3 Macroeconomic Research Office said Thailand's economy grew 2.4 percent in the first half of 2026. Private investment expanded 11.6 percent as commitments in electronics and digital infrastructure became actual spending. In a Wednesday commentary, AMRO said the global AI expansion also helped Thailand withstand an energy shock tied to the Middle East conflict.

Can AI reverse Thailand's growth slowdown?

AMRO projects the economy to grow 2.4 percent in both 2026 and 2027. Headline inflation should ease from 1.8 percent this year to 1.3 percent next year. However, AMRO cautioned that Thailand had become increasingly dependent on foreign-backed investment, technology exports and government spending.

Traditional industries remained under pressure. AMRO also cited subdued household incomes and declining lending to smaller businesses as limits on the recovery. Thailand faced energy-price swings, changes in trade policy and a potential slowdown in the global technology cycle, while limited fiscal headroom constrained its ability to absorb future shocks.

AMRO said public debt was approaching the statutory ceiling of 70 percent of gross domestic product. It said broadening the sources of growth was essential to a resilient recovery. The current investment wave offers Thailand a chance to reverse a three-decade decline in potential growth, which fell from about 7 percent before the Asian Financial Crisis to below 3 percent currently.

The structural causes extend beyond the current cycle. AMRO cited weaker post-crisis investment, an ageing population that constrained labor supply, and slower worker movement from agriculture into more productive sectors. Agriculture still employed 28 percent of Thailand's workforce but generated less than 9 percent of GDP, highlighting a large productivity gap.

AMRO said the global AI boom could support stronger capital accumulation and faster productivity growth if its benefits spread beyond a small group of technology industries. AMRO said: "The global AI boom represented an opportunity rather than a guarantee of sustained economic progress."

Why have AI investment gains stayed narrow?

AMRO said Thailand already supplied components for data centers and other digital infrastructure. Producers in the country had made hard-disk drives since the 1980s and optical components since 2000. Exports of AI-enabling goods rose about 50 percent in 2025, reflecting deeper participation in the global technology supply chain.

AMRO said new data centers also create demand for domestic construction, electricity, telecommunications and engineering services, while their increasing reliance on renewable energy could reshape power demand. The gains, however, remain constrained. Data centers typically import most high-value equipment, directing a substantial share of investment spending overseas rather than into domestic output.

The facilities also generate relatively few direct jobs despite heavy use of electricity, water and supporting infrastructure. If investment stays concentrated in capital-intensive projects with weak domestic supply-chain links, AMRO said, Thailand could gain a temporary increase in capital accumulation without lasting productivity improvements.

What must Thailand change?

AMRO set out three priorities.

1. Strengthen domestic supply chains. Supplier-development programs, technology partnerships and industry-specific training could help local firms meet multinational technical and quality standards. Procurement arrangements and technology networks involving large Thai companies could help small and medium-sized enterprises move into higher-value activities.

Thailand should also assess investment incentives against measurable outcomes, including domestic value added, skills development and technology transfer. That would test whether incentives deliver broader economic spillovers.

1. Expand cloud computing and AI access. Wider access could improve production processes, logistics and service delivery, especially among small and medium-sized enterprises. AMRO said reliable digital connectivity, a skilled workforce, sufficient competition and sound data governance were necessary, alongside support for businesses adopting practical AI applications.

Extend investment beyond AI industries. AMRO identified spillovers in energy, logistics, automation and robotics. Thailand could sustain investment in electric vehicles and their supply chains while upgrading food production and agribusiness. Better credit access for viable businesses, stronger competition and greater movement of workers and capital toward productive activities could broaden expansion.

Data centers' demand for uninterrupted electricity could accelerate energy reforms. AMRO cited direct power-purchase agreements and third-party grid access as ways to improve the power system and support productivity across the wider economy.

How much could stronger growth deliver?

AMRO's baseline scenario puts potential growth at around 2.5 percent to 3 percent annually from 2026 through 2035, before weakening further. Thailand would reach high-income status only after 2050. An alternative scenario assumes broader capital accumulation and produces average potential growth of about 3 percent, bringing that milestone forward to around 2046.

If productivity growth doubled to about 2 percent annually, AMRO estimated potential growth could exceed 4 percent from 2028. Thailand could then reach high-income status around 2040, more than a decade earlier than under the baseline. AMRO said: "These scenarios were illustrative outcomes rather than forecasts."

The forthcoming 14th National Economic and Social Development Plan could coordinate the required measures while the investment window remains open. AMRO said stronger local supply chains, developed workforce skills, expanded digital-technology adoption and a more reliable and cleaner electricity system could help Thailand secure gains beyond the current AI investment cycle.