Thai Q1 GDP continued to expand from the recovery of domestic demand, tourism, and exports. Going forward, the recovery momentum should continue, though with harsher implications from the war.

Thai Q1/22 GDP continued to expand.

During Q1/22, Thailand’s economic growth topped previous forecasts. Such growth represented a two consecutive quarters increase at 2.2% compared with the same period in the previous year. Furthermore, in comparison to the previous quarter that was boosted by recovering conditions from easing virus curbs, the seasonally adjusted economic performance in Q1 continued to improve by 1.1% QoQ sa. Notable growth drivers during the quarter included recovering domestic demand prompted by easing virus curbs, a growing number of visitors after the country reopened, facilitating export growth momentum from last year, as well as the introduction of government stimulus packages. In regards to the production approach, various economic sectors recovered with solid growth. The service sector improved according to tourism recovery. The industrial sector also grew following robust exports. Meanwhile, the agricultural sector edged up according to growing output quantity. However, the construction sector shrank in Q1 due to slowing government investment. 

Looking ahead, Thailand’s economic growth should see more impacts from the war in Ukraine.

During Q2, EIC expects that the economy will continue to recover following alleviating Omicron conditions indicated by lower numbers of daily infected persons and greater vaccination progress. Such better conditions should then usher domestic demand recovery. Furthermore, the tourism sector should also improve as various countries gradually started to reopen borders. However, EIC views that Thailand’s economic recovery may see harsher implications from the war in Ukraine in the periods ahead through worsening trade and inflation conditions. Thailand’s export sector should see slowing demand with further challenges from the global supply disruption prompted by the Russia-Ukraine war. Despite receiving limited impact during the prior period, EIC views that Thai exports will see more adverse impact during Q2. Meanwhile, rising inflation from higher energy and commodity prices will undermine domestic consumption and investments in the periods ahead.

EIC expects that the Thai economy will gradually recover in 2022 amid various risks.

During H2/22, the Thai economy should continue to gradually recover with the support from better tourism conditions following higher-than-expected tourist arrival outlooks after virus curbs were eased as well as expedited country re-openings. Meanwhile, exports should continue to expand throughout the remainder of the year, though at stalling rates due to slowing global economic trends. With such regard, EIC views that in 2022 the Thai economy should improve by 2.7%, though with various downside risks that warrant monitoring, including (1) prolonged periods of persistently high and potentially rising oil prices due to the Russia-Ukraine war, (2) supply disruptions in the manufacturing and logistics industry, including weaker-than-anticipated demand following China’s strict city lockdown measures and economic sanctions on Russia by western nations with potential retaliations from Russia, (3) major central banks tightening monetary policies, especially the Fed that may prompt a more constricted and volatile global financial environment, and (4) worsening economic scars from rising costs of living that could lower the household sector’s ability to repay debt on a wide scale. EIC will continue to monitor and analyze economic impacts in various dimensions before publishing the updated economic forecasts again in June.