SCB EIC has revised its 2026 forecast for Thailand’s economic growth to 2%, following the easing of the situation in the Middle East, which has led to lower energy prices, alleviating travel costs and supporting the recovery of the tourism sector. Exports and investment in certain industry groups also continue to expand well.

However, the Thai economy is likely to slow down in the coming period due to the impact of higher energy and raw material costs from the previous conflict, which is now affecting production costs, inflation, and purchasing power. Even with additional government support, particularly the 400 billion baht loan decree, the recovery remains a K-shaped pattern, concentrated in certain sectors, especially the electronics industry which is highly reliant on imports. Meanwhile, low- and middle-income households and SMEs remain vulnerable due to slowing income and high debt levels. For 2027, the Thai economy is expected to grow at a similar rate of 1.9%, reflecting limitations in new economic drivers amidst tight financial pressures and high external risks.

The Thai economy received a short-term boost from the easing of the conflict in the Middle East, but the cost impact continues to put pressure on the economy.

The decline in oil prices, though still higher than pre-war levels, has helped mitigate the impact on businesses, particularly the tourism sector, which is expected to recover better due to lower travel costs. Meanwhile, exports, especially in the electronics industry, continue to grow, and foreign investment is expanding well. However, the effects of previously high energy and production costs are still gradually being passed on to the real economy and will put more pressure on economic activity from the second quarter onwards.

SCB EIC estimates that these impacts will be transmitted to the Thai economy through three main channels: 

(1) energy and production costs will put pressure on inflation, the cost of living, household purchasing power, and affect business profit margins, especially those that are energy-intensive and logistics-intensive ;

(2) a slowdown in the global economy will affect exports due to weaker global purchasing power, especially in markets directly affected by the war. Meanwhile, the high import energy prices in the preceding period and the accelerating trend in capital goods imports will put pressure on the trade balance and current account balance, which are likely to worsen significantly this year; and 

(3) tighter financial conditions due to volatility in financial markets and capital flows, resulting in a higher risk premium and yield curve.

A clear K-shaped recovery is emerging, concentrated in large businesses and the technology sector, while households and SMEs remain vulnerable.

SCB EIC projects that the Thai economy is showing a clearer K-shaped recovery trend, driven primarily by large businesses and technology-related industries such as AI, data centers, electronics, and digital infrastructure. These sectors are supported by investment and exports of certain goods. However, because most of these businesses have a high proportion of imports, their positive impact on domestic supply chains, employment, and broader income is limited.

Conversely, low- and middle-income households and SMEs remain vulnerable to slow income recovery, rising production costs and living expenses, and high debt burdens. This limits consumption recovery and puts pressure on businesses that rely on domestic purchasing power, particularly small businesses and certain service sectors, impacting sales, liquidity, and debt repayment ability. The disparity in recovery between business and household sectors will be a significant constraint on the Thai economy in the coming period.

The Thai economy is projected to grow at a low rate in 2026-2027, despite government support through the 400 billion baht emergency decree.

SCB EIC forecasts Thailand’s economy to grow by 2% in 2026, higher than its previous forecast but still lower than the previous average. This forecast is driven by better-than-expected first-quarter economic figures, the easing of the situation in the Middle East, and government support, particularly the 400 billion baht loan decree, which will help support the economy through measures to reduce the cost of living, stimulate spending, and some investment related to the energy transition. However, the support from the “Thai Helps Thai Plus” measures will mainly boost economic activity in the short term, before this momentum slows towards the end of the year. The clarity of the energy transition measures still needs to be monitored to assess their impact on the economy.

For 2027, SCB EIC forecasts that the Thai economy will expand at a rate similar to 2026, around 1.9% , reflecting constraints from new drivers for medium-term growth. Existing drivers remain limited by factors such as slow consumer recovery due to the deleveraging process of household debt, concentrated investment and exports with high dependence on imports, reduced government policy space, and the vulnerability of SMEs facing intense competition and tight financial conditions.

Monetary policy faces limitations; the Monetary Policy Committee is expected to maintain the policy interest rate at 1% throughout this year.

SCB EIC estimates that the Monetary Policy Committee (MPC) is likely to maintain its policy interest rate at 1% throughout 2026. Inflationary pressures are primarily driven by supply-side factors, and long-term inflation expectations among the public and businesses remain unaffected. SCB EIC revised its average inflation forecast for this year down from its previous view to 2.6%, remaining within the target range. This is due to the easing of the war situation leading to lower energy prices. Simultaneously, Thailand maintains strong external stability and high levels of international reserves, thus eliminating the need to urgently raise interest rates to control inflation and currency depreciation, as has been observed in some regional countries.

Although policy interest rates remain low, overall financial conditions remain tight, particularly for retail borrowers and SMEs, due to slowing income growth and cautious lending practices by financial institutions driven by declining loan quality and repayment ability risks. Therefore, measures to assist borrowers and increase SME access to credit, coupled with measures to enhance income-generating capabilities, will play a crucial role in improving liquidity and sustaining the economy in the coming period.

Businesses face pressure, but opportunities remain in sectors related to AI, FDI, and megatrends.

Thai businesses face significant pressure from costs that remain higher than pre-war levels, supply chain volatility, and uneven demand recovery. These factors are impacting sales, profit margins, and liquidity for many businesses, particularly those limited in passing on costs to consumers in a fragile demand environment.

SCB EIC believes that future business trends will show clearer divergence, particularly among large corporations and SMEs, as well as businesses that can adapt by reducing costs, increasing productivity, and connecting with supply chains that thrive in line with major global trends. These businesses will be able to maintain their growth, but close monitoring of cost risks and demand volatility is necessary.

Growth opportunities remain in AI-related businesses, foreign investment, and megatrends such as electronics, data centers, clean energy, food, and healthcare. These sectors are supported by new investments, technological advancements, manufacturing relocation, and long-term shifts in consumer behavior. Therefore, Thai businesses should accelerate efficiency improvements, cost restructuring, and integration into new supply chains to enhance competitiveness amidst high global economic uncertainty.

The global economy is slowing down this year amid rising global inflation and interest rates.

SCB EIC forecasts that the global economy will expand by 2.5% and 2.6% in 2026 and 2027, respectively, driven primarily by investment.
In the field of AI, electronics manufacturing countries continue to benefit. The situation in the Middle East has improved, but high uncertainty remains. Looking ahead, the US tariffs under Section 301 remain a major risk to global trade in the second half of the year. Regarding monetary policy, major central banks around the world continue to prioritize the risk of inflation exceeding their targets. SCB EIC believes the Fed will not ease monetary policy this year, maintaining interest rates at 3.5-3.75% throughout the year. Global financial conditions are expected to remain tight due to high government bond yields.

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The North East and Yorkshire group has shed some jobs and two locations amid a downturn in the sector but says there should be improvements ahead

Builders’ merchant James Burrell says it continues to battle through tough conditions in the construction market but is determined to bounce back.

The North East-based group, which also has a number of branches in Yorkshire, has closed two sites between 2024 and 2025, and shed more than 35 jobs in the same time. Bosses at the materials retailer say an anticipated recovery in the construction sector since its steep 2023 decline has not materialised and has required “tough decisions” of the family-owned firm.

Newly published accounts covering the year to the end of October show James Burrell built turnover from £95.1m to £96.3m as it returned to operating profit of more than £566,000, having posted an operating loss of more than £1.1m the year before. Pre-tax losses over the same period narrowed from £2.06m to £486,789.

Writing in the accounts, managing director Mark Richardson said: “The anticipated recovery across the construction sector following a sharp decline in 2023, has yet to materialise. The cost-of-living effects are still prevalent across society and UK businesses are still having to deal with elevated inflationary and interest rate effects.

“For a multi-generational family owned and managed business, who recognises its people as its biggest asset, this has meant tough decisions have been necessary to balance the conflicting priorities of maintaining an acceptable financial performance, whilst supporting the employee base who serve the business so faithfully.”

He added: “Although we are not where we want to be, there is a feeling that we are moving back in the right direction again. We are faced with a higher cost threshold than we have previously been used to after recent material price inflation, tax rises and increases in the living wage. But we have made the necessary adjustment to right-size the business accordingly, stripping out nonessential costs and process inefficiencies, aided by the implementation of our new IT system.

“Despite our marketplace remaining subdued and uncertainty continuing to cloud the present position, we believe there will be improvement ahead. Our strong financial base and continued reinvestment in the business should ensure that James Burrell will continue to prosper and to take advantage of new opportunities as and when they arise.”

The firm said the challenging trading conditions of the last three years showed no signs of abating in 2026, and that despite inflation having eased, interest rates remain high and economic growth was stagnant. Bosses expressed disappointment in the trading performance despite the small improvements reported, but said the firm remained resilient and “determined to bounce back” when demand recovers.

One of key factors contributing to those tough trading conditions has been sluggish housebuilding activity. Mr Richardson said regular government pledges to encourage the building of new homes had failed to come good, pointing to problems associated with higher interest levels, delays in the planning system, a lack of help-to-buy type incentives and red tape facing developers

It is hoped the closures will improve the retailer’s financial position

Kitchens chain Magnet is to shut 15 stores as part of a major restructure. The company said it would close the “underperforming” locations as part of a company voluntary arrangement (CVA) aimed at helping secure the group’s finances.

The proposed CVA is intended to “address property costs that are no longer sustainable”, the company said.

Magnet did not disclose how many workers would be hit by the closures, but said affected staff “will be supported throughout and suitable alternative roles within the business will be offered wherever possible”.

The majority of the brand’s 159 stores will not be impacted by the restructuring and will continue to operate as normal.

The proposals, which will be overseen by Natasha Harbinson, Will Wright and Chris Pole from advisory firm Interpath, are subject to creditor approval.

Sophie Rose, chief executive of Magnet Group, said: “This is a difficult decision and not one we have taken lightly, particularly where colleagues may be impacted.

“But taking this action now is the right thing to do for the long-term health of Magnet Group.

“It allows us to deal with property costs that are no longer sustainable and protect the stronger parts of our estate.

“I am confident these proposals will help Magnet Group build a stronger, more resilient business that is better placed to serve customers, support partners and return to sustainable profitability.”

Magnet said it would transfer any customer orders to the closest alternative store if their local site closes.

List of Magnet stores to shut

– Andover, Hampshire

– Birmingham Minworth, West Midlands

– Blackburn, Lancashire

– Bridgwater, Somerset

– Brighton, East Sussex

– Colwyn Bay, Wales

– Dorking, Surrey

– Farnborough, Hampshire

– Ramsgate, Kent

– Romford Trade, Greater London

– Stirling, Scotland

– Stockton, County Durham

– Watford, Hertfordshire

– Weymouth, Dorset

– York Trade, North Yorkshire

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NEW YORK — Shares of Air Products and Chemicals Inc. surged more than 9 percent Tuesday as the industrial gases company announced it would not proceed with its Louisiana Clean Energy Project, freeing capital for other strategic priorities and signaling a shift in project focus.

The move sent the stock to around $296.58 in morning trading, reflecting investor approval of a more disciplined approach to capital allocation amid evolving energy market conditions. Air Products, a major supplier of hydrogen, oxygen and other industrial gases, has been navigating complex decisions around large-scale clean energy initiatives.

The Louisiana project, which involved blue hydrogen production and carbon capture, faced challenges including cost pressures and market dynamics. By stepping back, the company aims to redirect resources toward higher-return opportunities in its core industrial gases business and select growth projects.

Air Products maintains a strong global footprint with operations spanning atmospheric gases, process gases and specialty chemicals. Its business model benefits from long-term contracts with refineries, chemical plants and electronics manufacturers, providing stable cash flows.

The decision on Louisiana aligns with broader industry trends where some clean hydrogen projects have encountered delays due to permitting, infrastructure needs and economic viability. Air Products emphasized its commitment to the energy transition while prioritizing financial discipline.

Chief Executive Officer Eduardo Menezes has highlighted the importance of balancing innovation with returns. In recent quarters, the company reported solid operating performance driven by pricing actions, productivity improvements and volume growth in key segments.

Tuesday’s announcement provided clarity on capital spending plans. Air Products has a robust project pipeline, including expansions in Asia and investments in hydrogen infrastructure where demand fundamentals remain supportive.

Industrial gases demand has proven resilient across economic cycles. Air Products’ on-site supply model, where plants are built adjacent to customer facilities, creates high barriers to entry and predictable revenue streams.

The company’s merchant business, serving smaller customers through bulk and cylinder distribution, offers additional flexibility. Specialty gases for electronics and healthcare applications provide higher-margin growth avenues.

Analysts view Air Products as well-positioned in the hydrogen economy despite project adjustments. Its expertise in production, liquefaction and distribution positions it for opportunities in mobility, power generation and industrial decarbonization.

Tuesday’s share price reaction underscored the market’s preference for capital discipline over speculative large projects. Air Products shares had traded in a range reflecting mixed sentiment around clean energy investments before the announcement.

The company’s financial strength supports its strategic flexibility. Strong cash generation from operations and a solid balance sheet enable selective investments while maintaining dividends and share repurchases.

Air Products has a long history of innovation in gas separation and liquefaction technologies. Its membrane solutions and adsorption systems serve diverse applications from biogas upgrading to medical oxygen.

Sustainability remains integral to operations. The company publishes annual reports detailing progress on emissions reductions and community initiatives. Recent expansions, such as membrane manufacturing facilities, underscore commitment to technology leadership.

Global operations expose Air Products to currency and geopolitical risks, yet diversification across regions mitigates these factors. Asia continues as a growth engine with new plants supporting semiconductor and clean energy customers.

Tuesday’s trading volume was elevated as investors digested the news. The positive move contrasted with broader market caution in some industrial sectors.

Longer-term, analysts project steady earnings growth for Air Products driven by contracted volumes and pricing discipline. The company’s guidance has typically emphasized resilience even in uncertain macroeconomic environments.

Competitive landscape includes Linde and other industrial gas providers. Air Products differentiates through technology and customer relationships built over decades.

The Louisiana decision may open capacity for other initiatives. Management has signaled focus on optimizing existing assets and pursuing accretive opportunities in core competencies.

Investors will monitor upcoming quarterly results for updates on project pipelines and financial metrics. Air Products typically reports solid execution on safety, reliability and customer service.

The industrial gases sector plays a critical role in manufacturing, healthcare and energy. Air Products’ products touch everyday applications from food packaging to steel production.

Tuesday’s surge highlighted how strategic announcements can drive significant market reactions. The stock’s movement reflected relief that capital would be deployed more efficiently going forward.

Air Products continues to attract institutional interest for its defensive characteristics and growth potential. Dividend growth history adds appeal for income-oriented investors.

As the company refines its portfolio, focus remains on delivering value through operational excellence and targeted investments. The Louisiana pivot exemplifies this disciplined approach.

Market participants will continue assessing the implications for future project announcements and capital returns. Air Products’ track record suggests measured progress toward long-term targets.

The announcement reinforces the company’s adaptability in a dynamic energy landscape. By prioritizing returns, Air Products aims to strengthen its competitive position while supporting essential industrial processes.

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Business confidence slipped over the past month as firms wrestled with stubborn inflationary and cost pressures, with the Middle East war now into its fifth month, according to a survey published today.

The index of sentiment among private-sector companies compiled by Lloyds Bank’s Business Barometer fell by 3 points to 44 per cent in June, leaving it below the 12-month average of 47 per cent. Economic optimism also dropped, down 4 points to 31 per cent.

The lender said businesses were most worried about the rising cost of production, a concern likely tied to the higher energy prices triggered by the Gulf conflict. Over the weekend the United States and Iran traded strikes, each accusing the other of breaching the terms of the ceasefire agreement.

The decline in confidence was most pronounced among manufacturers, where optimism tumbled by 10 points to 33 per cent, a reflection of the sector’s heavy energy use. The reading among retailers fell by 8 points to 45 per cent. Energy costs have remained the single biggest brake on SME growth for much of the past year, with smaller firms warning they have no price-cap protection of the kind afforded to households.

Although inflationary worries persist, oil prices have eased sharply in recent weeks. The price of a barrel of Brent crude, the international benchmark, has fallen back below the levels seen before the conflict broke out at the end of February.

Amanda Murphy, chief executive for Lloyds Business and Commercial Banking, said: “While cost pressures and global uncertainty continue to weigh on business confidence, international firms are much more confident, with many seeing signs of supply chain disruption easing and strengthening customer demand.”

There was better news on jobs. Lloyds said companies’ hiring intentions rose for the first time in three months. Some 55 per cent of the 1,200 firms surveyed said they wanted to expand their workforce, against 14 per cent planning to cut headcount, a fall of 3 points over the month.

Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “Overall, while some sectors are holding up, the data suggests that uncertainty is still feeding through unevenly and weighing more heavily on parts of the economy than others.”

The figures may signal that the UK labour market is in the early stages of stabilising after two years of weakening. Data from the Office for National Statistics showed vacancies have fallen to their lowest level in five years.

Growth has also taken a knock from the war. GDP contracted by 0.1 per cent in April, the latest ONS figures show, and the closely watched purchasing managers’ index revealed that activity in the private sector dropped to a 14-month low.

The fall in confidence over the past month may equally be tied to the latest bout of political and policy uncertainty in Westminster, after Sir Keir Starmer resigned as prime minister earlier this month, clearing the way for Andy Burnham to enter No 10 as soon as mid-July.

Mr Burnham has yet to flesh out his tax and spending plans or name his chancellor. Ed Miliband and Wes Streeting are regarded as the most likely picks to replace Rachel Reeves in No 11. Starmer’s probable successor has signalled a preference for lowering VAT on the hospitality industry and overhauling the business rates regime.

Jamie Young

Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.

When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.

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