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Orathai Sriring and Kitiphong Thaichareon

BANGKOK — Thailand’s financial system expanded on the quickest tempo in a yr within the second quarter as eased COVID-19 restrictions boosted exercise and tourism, reinforcing views that extra fee hikes might be wanted to curb inflationary pressures.

Southeast Asia’s second-largest financial system is making a gentle restoration after the lifting of pandemic curbs however nonetheless faces headwinds starting from inflation at 14-year highs to China’s slowdown and weaker world demand.

The federal government barely revised its 2022 financial progress forecast to 2.7% to three.2% from an earlier 2.5% to three.5% vary. Final yr’s 1.5% progress was among the many slowest in Southeast Asia.

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The Thai financial system grew an annual 2.5% within the June quarter, the quickest because the second quarter of 2021, knowledge from the Nationwide Financial and Social Growth Council (NESDC) confirmed on Monday.

That in contrast with a forecast 3.1% rise in a Reuters ballot and a revised 2.3% progress within the March quarter..

The tempo may “not be that prime” probably due to decreased funding and final yr’s excessive base of seven.7% annual progress, NESDC head Danucha Pichayanan informed a information convention.

The financial system expanded 2.4% within the first half, and “the development will proceed later this yr,” he mentioned.

“Thailand’s financial system saved rebounding within the second quarter of the yr on the again of a reopening enhance,” Capital Economics mentioned in a word. Nonetheless, it expects inflation to weigh on client spending and funding, with exports restrained by a world financial slowdown.

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On a quarterly foundation, gross home product (GDP) grew a seasonally adjusted 0.7% in April-June, lacking a forecast 0.9% improve, and in opposition to a revised 1.2% within the first quarter.

“This mirrored the adversities of the Russian-Ukraine warfare,” mentioned Kobsidthi Silpachai, head of capital markets analysis of Kasikornbank.

“That is prone to persuade financial policymakers to proceed rigorously,” he mentioned, predicting the Financial institution of Thailand would elevate charges by one other 25 bps at its November assembly, slightly than at subsequent month’s assembly.


The central financial institution raised charges for the primary time in practically 4 years final week to 0.75% to counter inflation, signaling additional gradual will increase because the restoration features momentum.

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Thammarat Kittisiripat, economist at Tisco Group, mentioned the continued progress would make the BOT “extra snug” to hike its key fee additional, with 1 / 4 level anticipated at every of two remaining conferences this yr, taking the speed to 1.25%, a pre-pandemic stage.

Headline inflation in July was 7.61%, pushed by vitality prices and much exceeded the central financial institution’s goal vary of 1% to three%.

The federal government company raised its 2022 forecast for headline inflation to six.3% to six.8% from 4.2% to five.2% beforehand.

It now expects 9.5 million international vacationer arrivals this yr, versus 7 million projected earlier, after journey curbs had been lifted. Tourism usually accounts for 11-12% of GDP.

The numbers evaluate with 428,000 international vacationers final yr and practically 40 million guests in pre-pandemic 2019, with Chinese language vacationers accounting for practically 30% of the entire.

The company raised its export progress forecast to 7.9% this yr versus an earlier estimate of a 7.3% rise. (Reporting by Orathai Sriring, Kitiphong Thaichareon and Satawasin Staporncharnchai; Modifying by Jacqueline Wong)

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