Thailand’s economic recovery is strengthening, although rising inflationary pressures and slower global growth pose risks to the near-term rebound, according to Fitch Ratings’ analysts at its 2022 Thailand Sovereign and Bank Outlook Webinar.

Jeremy Zook, a Director of Asia-Pacific Sovereigns at Fitch said in his presentation that he expects Thailand to post GDP growth of 3.2% in 2022 and 4.5% in 2023, underpinned by steady improvements in tourism and domestic demand – while highlighting that higher inflation and slowing global growth were downside risks to the forecast. Thailand’s ‘BBB+’/Stable rating reflects the country’s sustained external finance strengths and a strong macroeconomic policy framework – which should help it to manage potential volatility amid tighter global credit conditions.

Zook said some other south-east Asian economies, such as Vietnam (BB/Positive), may see a strong recovery in GDP growth. He forecast Vietnam’s economy to expand by 6.1% in 2022 and 6.3% in 2023, boosted by rising exports and domestic consumption. However, slowing global demand is a downside risk. Laos (CCC) is under acute pressure from a commodity price shock, which led to foreign-exchange liquidity shortages and a sharp depreciation of the local currency, Zook added.

Parson Singha, a Senior Director of Financial Institutions at Fitch Ratings Thailand, commented that bank earnings are improving, although upside is constrained as economic activity remains low compared to pre-pandemic levels. Fitch expects impaired loans to rise during the year as regulatory relief fades, although high loan-loss coverage should reduce the need for additional provisioning.

Vietnamese banks’ prospects may benefit from favourable economic conditions, said Singha. Loan growth remains strong, which will support near-term asset quality and profitability metrics. However, rapid growth also means that capital buffers are likely to remain thin, which leave banks vulnerable to unexpected shocks.

A replay of today’s briefing will be available shortly at

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