The year 2026 is the year that Thais need to become aware of a new threat that few people talk about: deflation, or the continuous decline in prices of goods. Sounds good, right? Cheaper prices. But in reality, it’s a dangerous signal indicating that the economy is suffering.

It differs from the high inflation we saw before. In the past, prices rose every day. Now, we are entering a period where prices are falling instead. The problem is, when people realize prices will keep dropping, they stop buying. Businesses can’t sell their products, have to lower prices further, cut jobs, and reduce wages. This creates a vicious cycle that’s hard to escape.

For Thailand, this situation is very risky. The projected GDP growth in 2026 is only 1.5-1.6%, which is very low. Coupled with household debt exceeding 85% of GDP and a rapidly aging society, all signs point to weakening demand and falling prices.

Deflation is not a new phenomenon. Economic history is full of frightening case studies. During the Great Depression (1929-1933), the U.S. saw consumer prices drop by a cumulative 27%. Stock markets crashed, banks failed, the money supply shrank by over 30%. The result was a 25% unemployment rate and a halted economy.

Another interesting case is Japan. After the bubble burst in 1990, the country has been stuck in a prolonged deflationary period for over 30 years. Land and stock prices plummeted. Japanese companies stopped investing and focused on debt repayment. People got used to waiting for prices to fall, delaying spending. Wages stagnated. This is a picture of long-term deflation that destroys.

What must be understood is that deflation is not just falling prices. It’s a signal that consumers’ purchasing power is weakening, confidence in the economy is declining, money circulation is slowing, banks are tightening lending, and debt becomes a heavier burden because income decreases while debt remains the same. This is what I call “accumulating debt.”

In the capital markets, listed companies will suffer losses because profits decline, causing stock prices to fall—especially cyclical stocks that fluctuate with the economy. Real estate prices and rents also drop, increasing the risk of bad debts.

So, what should we invest in during deflation? For those wanting to preserve capital, “Cash is King.” Holding cash or parking funds in money market funds keeps you liquid and ready to buy undervalued assets (Distressed Assets) when the crisis ends.

Government bonds, especially long-term ones, are a strong fortress. When central banks cut interest rates, bond prices rise. The real return (Real Return) from interest becomes higher because prices fall. Long-term U.S. Treasury ETFs like TLT are good options.

Defensive stocks should not be overlooked. Essential goods such as food, beverages, and tobacco are still purchased even during economic downturns. Utility sectors like electricity and water have low revenue volatility. Healthcare stocks are also resilient, as illnesses don’t discriminate based on economic conditions.

Gold is also popular during severe deflation. It’s a safe asset when people distrust the banking system. Central banks worldwide are buying gold, and falling interest rates are good for gold prices.

For risk-takers aiming to profit from the crisis, CFD tools can help generate gains in any market condition. Short Selling allows you to open a sell position when you expect the market to decline. If you analyze that the S&P 500 will fall, you can open a Sell position. When prices drop as expected, you profit from the price difference.

You can also trade bonds like a pro. If you believe interest rates will fall and bond prices will rise, open a Long position in TLT CFDs. Gold trading (XAU/USD) is also possible, using leverage to enhance your investment efficiency.

In summary, 2026 is the year to understand what deflation is. It’s not a distant issue. It will determine your financial fate. Adjusting your portfolio to hold bonds, accumulating gold, or using strategies like Short Selling are all ways to help you not only “survive” but also profit while others panic.