GDP rebounded 1.8% q/q in Q4, driven by a turnaround in household spending and a rise in international visitors. Nonetheless, the recovery continued to lag its regional peers with GDP growing only 1.6% in 2021 after -6.2% in 2020, says Oxford Economics.

Oxford Economics expects economic momentum to improve further in 2022, with GDP rising by an above-consensus 5.1%. However, Oxford Economics expects the policy rate to remain at 0.5% until Q1 2023 as Thailand’s stunted recovery and a partial recovery in tourism still warrants an accommodative stance.

In line with our above-consensus forecast, Thai economy expanded 1.9% y/y in Q4 after contracting by an upwardly revised 0.2% in Q3 (Figure 1). On a seasonally adjusted basis, GDP grew 1.8% q/q amid an easing in most Covid restrictions and a rise in international tourist numbers.

Uneven recovery

However, the domestic recovery was uneven. Amid higher vaccination rates and improved mobility, private consumption rose 3.6% q/q (0.3% y/y) in Q4, but total investment fell 1.7% q/q (-0.2% y/y), with both public and private construction remaining very weak.

Net exports added 0.5ppt to y/y GDP growth in Q4 as import growth eased amid an unwinding of previous quarter’s surge in inventories. Meanwhile, total exports rose 17.7% y/y as manufacturing capacity increased, with a pickup in international visitors boosting service exports.

Interim Omicron drags aside, Oxford Economics expects domestic demand to be a key driver of GDP this year with the resumption of its “Test and Go” scheme to further boost growth. But the economy still faces several headwinds, including Covid-related disruptions to labour mobility, slower Chinese growth, and higher business and consumer prices.

About the author

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Sign Up for Our Newsletter

Get notified of our weekly selection of news

You May Also Like

Sanctions against Russia should not derail Thailand’s economic recovery says BoT

The effects of sanctions against Russia should not derail the overall economic recovery path said the Bank of Thailand in its latest issue of the minutes of the Monetary Policy Committee Meeting.

East Asia and Pacific Growth Buoyed by Recovery in Domestic Demand

Growth in developing East Asia and the Pacific outside of China is forecast to accelerate to 5.3% in 2022 from 2.6% in 2021, according to the World Bank’s East Asia and Pacific October 2022 Economic Update.

IMF forecasts 2.8 percent GDP grow in 2022

Growth prospects critically hinge on the return of foreign tourists, while soaring energy prices due to the prolonged war in Ukraine could further weigh on private consumption and external demand