BANGKOK (AFP) — Thailand lowered its economic growth and tourist arrival forecasts Tuesday, citing the impact of the Middle East war on energy prices and travel demand.

The finance ministry said gross domestic product growth is projected at 1.6 percent, down from 2.4 percent in 2025 and below earlier estimates of 1.5 percent to 2.5 percent.

Tourist arrivals are now expected at about 33.5 million this year, roughly 2 million fewer than previously forecast. Thailand welcomed nearly 33 million visitors last year.

The ministry said travel from Europe and the Middle East has declined due to the US-Israeli war against Iran, which has pushed up fuel prices. Middle Eastern arrivals dropped by a third in March year-on-year, while European visitors fell about 4 percent, though Asian arrivals rose 6 percent.

Inflation is also expected to rise, with core inflation forecast at 3 percent, up from an earlier estimate of 0.3 percent.

Tourism remains a key driver of Thailand’s economy, though arrivals have yet to return to pre-pandemic levels.