The selloff follows a sharp rise in global oil prices toward $100 a barrel, intensifying pressure on Thailand, which relies on the Middle East for nearly half of its oil and gas imports, according to Krungsri Research.

Data showed foreign investors were net sellers of $823 million in Thai equities in March, while bond outflows reached $705 million, marking the largest combined outflow since October 2024. The reversal came after a brief resurgence in inflows earlier this year, including $1.7 billion in equity purchases in February.

Investor optimism had been buoyed by the election of Prime Minister Anutin Charnvirakul, whose victory raised expectations of political stability and economic reform.

However, the outbreak of the Iran conflict at the end of February triggered a rapid reassessment of risk.Analysts say Thailand faces a more acute challenge than many regional peers due to its economic structure and policy constraints.

The economy had already been struggling, with growth of 2.4% last year and a prolonged period of deflation that prompted a rate cut by the central bank in February.“The risk remains that higher fuel costs hit consumption and disrupt exports and tourism,” said Daniel Tan, a portfolio manager at Grasshopper Asset Management, highlighting concerns about key growth drivers.

Thailand’s heavy reliance on natural gas, which accounts for more than half of its power generation, adds to its exposure. Rising liquefied natural gas imports are expected to further increase costs as energy markets tighten.

The Thai baht has weakened nearly 3% since the conflict began, though it has recovered some ground following a recent ceasefire. Analysts say the currency is acting as a key adjustment mechanism, helping absorb external shocks.

Market participants also point to limited policy flexibility. With public debt nearing the government’s self-imposed ceiling of 70% of gross domestic product, fiscal space is constrained, while monetary policy faces a trade-off between supporting growth and containing inflation.

“There’s a broad consensus among investors that Thailand is in a policy bind,” said Gary Tan of Allspring Global Investments, noting that the central bank has limited room to tighten or ease policy without adverse consequences.

Inflation, which had been contracting earlier this year, is now projected to rise as much as 3.5% depending on how the conflict evolves, marking a sharp shift in the economic outlook.

While a temporary ceasefire has supported a rebound in Thai equities and the baht, analysts caution that prolonged high energy prices could further weigh on growth, consumption and the external balance.

The country emphasized the importance of resisting tariff pressures and protecting the stability of global supply chains during a major economic dialogue in Beijing.

Premier Li Qiang urged global partners to avoid rising protectionism, stressing that cooperation remains the foundation of steady worldwide growth.

He said the global economy faces heavy strain from new trade restrictions, making it essential for governments and international organizations to safeguard free trade.

China met with leaders from major global institutions, including the IMF, World Bank, WTO, OECD and ILO, highlighting the need for better global governance.

The message focused on promoting fair competition, supporting emerging economies and ensuring that global markets remain open and accessible.

Li noted that increasing tariffs around the world are disrupting trade flows and affecting economic activity across developing and developed nations alike.

He reiterated that all countries benefit when supply chains function smoothly and when businesses can access overseas markets without excessive barriers.

China’s record trade surplus, driven by strong exports to Europe, Australia and Southeast Asia, has brought renewed attention to its role in global commerce.

While some nations call for reforms to balance global consumption, China stressed that it is committed to boosting domestic demand and diversifying its economic model.

Global leaders have recently engaged China on these issues, signalling the need for continued dialogue to prevent economic tensions from rising.

China, in turn, emphasized that long-term stability will come from collaborative efforts rather than unilateral tariffs or restrictive trade measures.

Experts say China’s push to expand trade ties with non-U.S. markets reflects its broader ambition to strengthen global commercial partnerships.

This diversification strategy is expected to create new investment opportunities, encourage innovation and support long-term economic resilience.

Analysts also note that China’s growing market offers vast potential for global companies looking to expand their presence in Asia.

With continued growth expected over the next five years, domestic demand may gradually help ease trade imbalances and create a more balanced global economy.

China reaffirmed its commitment to reforms that support sustainable development and high-quality economic expansion.

Officials highlighted ongoing investments in technology, infrastructure and green industries to ensure the economy remains competitive and resilient.

While some economists believe further policy adjustments could help stabilize global trade, most agree that cooperation is far more effective than confrontation.

They stress that coordinated action among major economies will help mitigate risks and promote shared prosperity.

China stated that it will continue to maintain open communication with its global partners and contribute to international economic stability.

Its leaders expressed confidence that dialogue, fairness and mutual respect will guide future trade discussions and reduce friction between major economies.

As global markets navigate complex geopolitical and economic challenges, China’s message focused on partnership rather than pressure.

The country called on all nations to work together to preserve free trade, reduce uncertainty and strengthen the global economic system.

By promoting cooperation and constructive engagement, China hopes to reassure investors, encourage innovation and build long-term trust across global markets.

The message underscored the need for shared responsibility in shaping a more balanced, open and prosperous international economy.