# FTI Calls for Accelerated FTAs and Structural Reforms Amid 2026 Uncertainty - Link: https://www.thailand-business-news.com/economics/279981-fti-calls-for-accelerated-ftas-and-structural-reforms-amid-2026-uncertainty - Published: 2026-01-21T08:52:00+07:00 - Author: Arun Upadhyaya **Thailand’s exports may contract in 2026 due to trade war and policy uncertainty, but FTAs are seen as a lifeline to boost economic growth.** --- ## Key Points * **Thailand’s economy in 2026 is projected to face significant uncertainty and weak growth, risking stagnation and a decline in competitiveness** * Industry seeks free trade agreements to expand markets and reduce reliance on existing destinations. * **To tackle these challenges, the FTI emphasizes the need for targeted governmental measures, underscores key growth sectors, and stresses the critical role of political stability.** Thailand’s economy in 2026 is projected to face significant uncertainty and potential stagnation, risking a decline in competitiveness. The Federation of Thai Industries( FTI) is urging the government to accelerate Free Trade Agreement (FTA) negotiations and implement structural reforms to navigate these challenges. ADVERTISEMENT Economic forecasts are pessimistic, with the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) expecting 1.6–2.0% growth, and the Siam Commercial Bank Economic Intelligence Centre (SCB EIC) predicting a low of 1.5% – potentially the weakest in over 30 years. The International Monetary Fund (IMF) also warns of a global slowdown impacting Thailand’s export-dependent economy and projects Thailand’s GDP ranking in ASEAN could fall from second to fifth by 2030. ### Economic Outlook **Thai exports are expected to contract in 2026**, with a forecasted decline of between -1.5% and -0.5% due to the trade war, policy uncertainty, and geopolitical tensions. The industry sees **accelerated negotiations on new free trade agreements( FTAs)** as a key mechanism to expand markets and reduce reliance on existing destinations. Industrial production is also expected to slow, with the Manufacturing Production Index (MPI) under pressure from transshipment and dumping of low-priced goods. ### Challenges and Risks The **stronger baht has weighed on tourism and exports**, while consumer spending has recovered only modestly amid high household debt and cautious sentiment. Climate change, including floods and drought, as well as **environmental measures like the EU’s Carbon Border Adjustment Mechanism (CBAM)**, are increasing business costs and forcing exporters to upgrade production standards. Despite these challenges, investment in 2026 is still expected to grow in some industries, particularly in** digital industries, electric vehicles, electronics, food processing, and clean energy**. ### Related**Posts** ### 󠀁[Thailand Faces a New Economic Test Nearly 30 Years After Its IMF Rescue](https://www.thailand-business-news.com/economics/334123-thailand-faces-a-new-economic-test-nearly-30-years-after-its-imf-rescue)󠁿 ### 󠀁[IMF says AI investment is giving Thailand’s technology supply chain a boost](https://www.thailand-business-news.com/economics/333785-imf-says-ai-investment-is-sustaining-global-growth-giving-thailands-technology-supply-chain-a-boost)󠁿 ### 󠀁[Singapore Pillar Two Registration: Steps Multinational Groups Should Take](https://www.thailand-business-news.com/asean/329970-singapore-pillar-two-registration-what-multinational-groups-need-to-do)󠁿 ### 󠀁[Bank of Thailand Warns Repeated Shocks Are Weakening Thailand’s Economic Resilience](https://www.thailand-business-news.com/economics/332788-bank-of-thailand-warns-repeated-shocks-are-weakening-thailands-economic-resilience)󠁿 The industrial sector is anticipated to remain in “stabilisation mode” due to a confluence of external and domestic pressures. Key risks include: * **External Factors:** - A global economic slowdown, ongoing trade wars, and uncertainty in US tariff and trade policies. - Intensifying competition from imports and geopolitical tensions, leading to a forecast export contraction of -1.5% to -0.5% in 2026. * **Domestic Constraints:** - Vulnerabilities in households and businesses, weighing on purchasing power and investment due to high debt. - Political uncertainty, with a 2026 election, and potential late-year flooding estimated to cause 110–120 billion baht in economic damage. - Ongoing tensions along the Thai–Cambodian border dampening economic activity. * **Sector-Specific Challenges:** - The Manufacturing Production Index (MPI) is pressured by transshipment and dumping of low-priced goods. - SMEs continue to struggle with debt and liquidity issues. - Consumer spending remains modest due to high household debt and cautious sentiment. - A strong Thai baht adversely affects tourism and exports. * **Environmental Factors:** - Climate change-related events like floods and droughts. - Increased business costs from environmental measures by trading partners, such as the EU’s Carbon Border Adjustment Mechanism (CBAM) and deforestation regulation (EUDR), necessitating production standard upgrades and traceability systems. Despite the fragile outlook, some industries are expected to see investment growth in 2026 as companies focus on developing domestic supply chains. These areas include digital industries, electric vehicles (EVs), electronics, food processing, and clean energy, which are crucial for efficiency gains and long-term investment attractiveness. To counteract the downturn, the FTI proposes comprehensive strategies: * **“Reinvent Thailand” Initiative:** Urging the government to accelerate economic restructuring through: - Adding value in manufacturing and strengthening supply chains. - Promoting local content and “Made in Thailand” (MiT) products via tax measures, financing, and public procurement. These align with government “Quick Big Win” measures for SMEs. * **Accelerated FTA Negotiations:** Seen as a lifeline to expand markets, reduce reliance on existing destinations, and boost the competitiveness of Thai businesses. * **Political Stability:** A unified government emerging from the 2026 election with policy continuity is deemed essential to restore investor confidence and facilitate meaningful structural reforms. The FTI chairman, Kriengkrai Thiennukul, emphasizes that 2026 is a pivotal moment to lay new foundations. By upgrading industries from original equipment manufacturing( OEM) to higher value-added sectors, powered by technology, innovation, automation, and clean energy, under a “ONE Thailand” cooperative vision, the country can transform uncertainty into a starting point for more stable and sustainable growth. ### Reshaping the Economy The “Reinvent Thailand” concept has been proposed to **reshape the economy by adding value in manufacturing, strengthening supply chains, and promoting local content**. This aligns with the government’s “Quick Big Win” measures aimed at supporting SMEs. A unified government with policy continuity after the 2026 election would help restore investor confidence and enable more tangible structural reforms. **Upgrading industry towards higher value-added sectors** powered by technology, innovation, automation, and clean energy could turn uncertainty into a starting point for more stable and sustainable growth.