Economic activity in Thailand is recovering from an unprecedented crisis, supported by a swift and bold policy response, while inflation is on an upward trend reflecting rising commodity prices, said IMF in its latest statement.

Thailand’s economy grew by 1.5 percent in 2021 bolstered by the implementation of a multi-pronged policy support package, and a rebound in exports.

Thailand’s economy is recovering from an unprecedented crisis emanating from multiple waves of the COVID-19 pandemic. Ample policy space has allowed a swift and bold policy response and vaccine rollout has accelerated.

IMF country report

The current account balance turned into a deficit of 1.7 percent of GDP in 2021, from a surplus of 4.2 percent of GDP in 2020, largely reflecting a sharp decline in tourism receipts and soaring shipping costs amid supply chain disruptions.

Strong consumption and exports

The growth momentum continued so far this year based on strong consumption and exports. Reflecting rising energy prices, headline inflation accelerated to 5.9 percent y/y during Jan-July 2022 from a 1.2 percent average inflation recorded in 2021.0

The economic recovery continues in 2022 but is clouded by the deteriorated global outlook. Real GDP is projected to grow by 2.8 percent in 2022, lower than initially expected, as the prolonged war in Ukraine dampens domestic demand through rising commodity prices and lowers external demand.

Growth to rebound to 4 percent in 2023

As the pandemic subsides, GDP growth is expected to rebound to about 4 percent in 2023 before trending down to its potential rate of about 3 percent in the medium term.

Headline inflation to 6.1 percent in 2022

Headline inflation is expected to average 6.1 percent in 2022 driven by high commodity prices, before decelerating to 2.5 percent in 2023—within the Bank of Thailand’s (BOT) target range.

The current account deficit is expected to narrow to -0.8 percent of GDP in 2022 as tourism receipts gradually pick up along with the removal of COVID-19 entry restrictions, and to return to a surplus of around 3-3.5 percent of GDP over the medium term.

Return of foreign tourists critical

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. A disorderly tightening of global financial conditions and spillovers from a sharper growth slowdown in China amidst already-stretched private sector balance sheets could derail the economy’s rebound.

Thailand: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Thailand (imf.org)

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