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
Boris Sullivan is a business news editor based in Hong Kong. He has over 15 years of experience in covering the latest trends and developments in the Asian markets, as well as the global economy.