Thai economy back on track with 2.2% growth in 1Q22 as exports surge

  • Thailand’s economy expanded 2.2% y/y in 1Q22, its National Economic and Social Development Council (NESDC) said on 16 May 22, as robust exports and the easing of COVID restrictions helped to boost business activities and revive tourism. It beats the 2.1% median forecast of 15 economists polled by Reuters.
  • The NESDC has lowered its 4Q22 growth rate slightly to 1.8%, down from 1.9%.
  • Exports, which account for more than 60% of the country’s GDP, were the main driver; they grew 19.5% in Mar 22, a 30-year-high, and were expected to stay elevated thanks to a weakening baht. Thailand’s currency in May 22 has been plumbing five-year lows.
  • Foreign tourists, a significant contributor to the kingdom’s economy before the pandemic, are also starting to trickle back. Almost a million foreign tourists arrived during 1Q22. The number for May 22 alone is expected to surpass the million mark as the government has also dropped all testing requirements.
  • With exports and tourism boosting growth, the economy is also running into inflation as energy and food prices spiral, dampening purchasing power and hampering the recovery.
  • Thai inflation in Mar 22 rose to a 13-year-high, hitting 5.73% and forcing the Commerce Ministry to raise its average inflation target for 2022 to 4% to 5%, well above its previous forecast of 0.7% to 2.4%.
  • The NESDC, meanwhile, cut its economic growth target to 2.5% to 3.5%, down from the 3.5% to 4.5% it forecast in Feb 22, citing the inflationary headwinds and the Russia-Ukraine war persistently weighing on the economy.

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