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Thailand's Economic Growth Opportunities in Q2 2022

April, 11 2022

Economic Recovery Trends in Q2 2022

Dr. Amonthep Jowala, Assistant Managing Director, Head of Research, and Investment Advisor at CIMB Thai Bank, stated that since the beginning of the year, Thailand’s economy has encountered volatility from multiple factors.

Despite these challenges, Thailand’s economy showed signs of recovery in Q1, following the severe COVID-19 impact in Q2 and Q3 of the previous year.

Thailand’s exports remained strong, even amidst challenges such as high freight rates, container shortages, and semiconductor supply chain disruptions affecting the electronics and automotive industries.

However, strong global demand for Thai products and above-potential economic growth in many major economies provided support for Thailand’s export sector in 2022.

As a result, Thailand’s economy in Q2 is expected to grow faster than in Q1. It is forecasted that Q2 GDP will expand by 2.3% year-on-year (YoY) or 0.8% quarter-on-quarter (QoQ) after seasonal adjustments.

Key Factors Supporting Economic Growth in Q2

1. Consumer Confidence and Tourism Rebound

   • Improved consumer confidence as people adapt to living with COVID-19.
   • Increase in both international and domestic tourism, benefiting Thailand’s economic activities.

2. Higher Agricultural Incomes

   • Increased farm output and rising agricultural prices, which often move in tandem with global oil prices.
   • Higher income for rice, rubber, palm oil, sugarcane, and cassava farmers.

3. Continued Export Growth

   • Exports of agricultural products, petrochemicals, and commodities are expected to remain strong, as their prices rise alongside oil prices.
   • Exports of automobiles, auto parts, electronics, and processed food remain competitive, with key markets like the U.S., Europe, and ASEAN still expanding.

4. Thai Baht Expected to Appreciate in H2 2022

   • The Thai baht is expected to strengthen to 33.00 THB per USD by the end of 2022.
   • Investor confidence in global financial markets may improve after gradual U.S. Federal Reserve rate hikes.
   • Higher tourism revenue and potential interest rate hikes by the Bank of Thailand (BoT) could attract foreign capital inflows.

5. Interest Rate & Government Measures

   • The Bank of Thailand (BoT) is expected to implement measures beyond interest rate policy to stabilize the foreign exchange market and financial stability.
   • The government is likely to continue playing a role in managing living costs in the second half of the year.