Opportunities for Thai economic expansion in 2022, Quarter 2

Thai economy 2022

Dr. Amorntep Chawala, Assistant Managing Director, Head of Research and Investment Advisory, CIMB Thai Bank, revealed that since the beginning of the year, the Thai economy has faced volatility due to uncertainty.

Both the outbreak of the Omicron variant of COVID-19, the outbreak of African Swine Fever (ASF), followed by the war between Russia and Ukraine, led to a rapid rise in oil prices and raised concerns about accelerating global inflation.

Amidst the volatility, the Thai economy in the first quarter has continued to recover from the previous year after facing the COVID-19 problem in the second quarter and worsening in the third quarter.

Early this year, exports continued to expand remarkably, despite high freight rates, a shortage of containers, and a shortage of semiconductor chips that affected the electronics and automotive manufacturing sectors.

However, the economies of major countries still have high demand for their products, and the economies of many countries are still growing higher than their potential, which is good for Thai exports this year.

This means that the Thai economy is likely to expand at a faster pace in Q2 than in Q1. We expect Thai GDP in Q2 to expand by 2.3% year-on-year or 0.8% quarter-on-quarter after seasonally adjusted.

The observations of the economic recovery in the second quarter are as follows:

• When confidence is restored and people believe that they can live with Covid, it will be good for tourism from abroad and Thai people in the country.
• Agricultural income has improved due to increased production volume and agricultural product prices, which have mostly moved in the same direction as oil prices, resulting in better income from rice, rubber, palm, sugarcane, and cassava cultivation.
• Exports also expanded in the second quarter, with exports of agricultural products, petrochemicals, and other commodities whose prices moved up in line with oil prices, likely supporting exports. In addition, exports of automotive and parts, electronics and parts, and processed food groups, where Thailand is competitive and important markets such as the United States, Europe, and ASEAN, continue to grow.
• It is believed that the baht will turn around and appreciate against the US dollar in the second half of the year and reach 33.00 baht per US dollar by the end of the year due to the increasing confidence in the global capital market after the Fed gradually raised interest rates, including Thailand starting to receive more income from tourism, and from the expectation that the Bank of Thailand will start to raise interest rates after the Thai economy recovers, which should attract investors to return to invest in Thailand to speculate on the baht, which will continue to appreciate next year.
• In terms of interest rates, the BOT is likely to find other measures besides the policy interest rate to maintain exchange rate stability and financial market stability, while the government is likely to play a greater role in continuously managing the cost of living in the second half of the year.

Source: MGROnline

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