Thailand's zombie firm problem is accelerating: 12.3% of SMEs now meet the definition (profitability below debt service costs for 2+ quarters), nearly triple the 5% rate for large firms. SCB EIC warns this capital and labour misallocation is suppressing productivity and GDP growth. Real estate, hospitality, food services, healthcare, and telecom sectors are most affected. Policy must distinguish between salvageable firms (upskilling) and uncompetitive ones (resource reallocation) to prevent long-term economic drag amid already-fragile K-shaped recovery.