EIC Siam Commercial Bank Warn the Thai economy in the second quarter! Cope with exorbitant energy prices – exports stall, war poisoning
Dr. Punyawat Srisingh, Senior Economist, Economic Intelligence Center (EIC), Siam Commercial Bank PCL. and Mr. Wichan Kulati Analyst, Economic Intelligence Center (EIC) Siam Commercial Bank Public Company Limited Let’s analyze the Thai economy in the first quarter of 2022 and forecast the market for the whole year 2022 that
-Thai economy in Q1/22 continued to expand
The Thai economy in the first quarter of 2022 expanded faster than expected. It expanded for the second consecutive quarter at 2.2% compared to the same period of the previous year. and if compared to the previous quarter when the Thai economy began to recover from the relaxation of disease control measures The Thai economy in the first quarter was able to expand 1.1% from the previous quarter. After seasonal adjustment (QOQ sa), the economy was supported mainly by a recovery in domestic demand benefited from the easing of disease control measures and the return of tourists following the opening of the country. Exports continued to expand well from the previous year. and economic stimulus measures from the government On the other hand, when considering the production approach, there has been a good recovery in many economic sectors. especially the service sector, which is in line with the tourism sector that has begun to recover. including the industrial sector that recovered in line with exports and the agricultural sector improved in line with output. However, the construction sector contracted in the first quarter due to a slowdown in public investment.
-In the next phase, the war in Ukraine will begin to affect the Thai economy.
In the second quarter, EIC expects the economy to continue to recover from the epidemic situation of Omicron which has begun to ease from the gradual decrease in the number of daily infections and the high vaccination rate of the population. As a result, domestic demand recovered. In addition to the tourism sector that expands from the gradual opening of the country around the world, however, EIC expects that the Thai economic recovery will begin to see the impact of the war in Ukraine going forward. through the effects of trade and inflation. Thai exports will begin to see the impact of a slowdown in demand. Including the problem of disruption of global supply from the war between Russia and Ukraine. Although the impact on Thai exports has been limited in the past, EIC expects Thai exports to be more affected in the second quarter while inflationary impacts from higher energy and commodity prices. This puts pressure on domestic consumption and investment in the next phase.
-EIC expects the Thai economy to expand gradually in 2022 among many risk factors
As for the Thai economy in the second half of the year It is expected that there is a gradual recovery trend. Tourism was the main supporting factor in the latter part of the year due to better-than-expected tourist trends. This is a result of easing disease control policies and opening cities faster. In addition, exports are still expanding, but will slow down during the rest of the year due to the global economic slowdown. The EIC forecasts that the Thai economy in 2022 will expand slowly at 2.7%, but there is still a risk of The lows to watch for include: (1) oil prices that may rise and stay at longer-than-expected levels due to the Russian-Ukrainian war factors; (2) supply disruptions in the manufacturing and transportation sectors. Including the demand that may slow down more than expected. Both from China’s strict lockdown policy and economic sanctions once morest Russia by Western nations. including retaliation from the Russian side
(3) Tight monetary policy of the world’s major central banks. In particular, the US Federal Reserve (Fed) may cause global financial conditions to become more tight and volatile and (4) the effect of economic scars that are aggravated by the impact of higher cost of living. This may affect the ability to pay debts of the broader household sector. The EIC is monitoring and analyzing the economic impact in various fields before the economic projection is published once more in mid-June.