Thailand's economy expanded at the fastest rate in a year in the second quarter, as lessened COVID 19 restrictions boosted activity and tourism, but multi-year high inflation and China's slowdown are a drag on the nascent recovery.
The growth forecast for economic growth in 2022 was revised to 2.7 per cent to 3.2 per cent from the earlier 2.5 to 3.5 per cent growth range, citing a rebound in the crucial tourism sector, increased consumption and exports. The growth of 1.5 per cent last year was among the slowest in Southeast Asia.
The economy grew by an annual 2.5 per cent in the June quarter, the fastest since the second quarter of 2021, according to data from the National Economic and Social Development Council on Monday.
That was higher than the forecast 3.1 per cent rise in a Reuters poll and upwardly revised 2.3 per cent growth in the March quarter. Southeast Asia's second largest economy is making a steady recovery after the lifting of the pandemic curbs but the absence of Chinese visitors and China's slowdown has kept pressure on growth at a time when Thailand has started to raise rates to tackle inflation.
The economy of Thailand rebounded in the second quarter of the year due to a reopening of the economy. The tourism sector is enjoying a decent rebound and we expect the recovery to continue over the coming months, Capital Economics said in a note.
It expects inflation to weigh on consumer spending and investment while exports will be restrained by a slowdown in the global economy.
In April-June, gross domestic product GDP grew 0.7 per cent, a seasonally adjusted 0.7 per cent, missing a forecast 0.9 per cent increase and against an upwardly revised 1.2 per cent in the first quarter.
Kobsidthi Silpachai, head of capital markets research at Kasikornbank said the Russian-Ukraine war bumped up import bills and imported inflation.
This is going to persuade monetary policymakers to act carefully. He said that the Bank of Thailand will shift rates by another 25 bps at the November meeting rather than at the September meeting to better assess the response of the last move and the stance of the U.S. Federal Reserve.