An outlook on the Thai economy in 2022, will it grow or become vulnerable?
Image source : https://www.pexels.com/photo/city-industry-factory-warehouse-4483775/
After the disclosure of the 2022 budget bill, amounting up to 3.1 trillion baht, to the council for consideration by August 2021, there are significant points to be observed regarding the economy as follows.A budget of 338,547.6 million baht will be spent towards strategies to build competitiveness to increase economic competitiveness to achieve a stable growth. The focus will be on agricultural development such as smart agriculture, biological agriculture and the development of agricultural industry, tourism, logistics, smart cities, promoting technology and a special economic zone, industrial estates, including modern research innovation, among others. It is clear that the development trend is focusing on technological development to truly upgrade to Industry 4.0. This is consistent with the national strategy and national reform plan.
From the mentioned strategies, the results are expected to be seen more concretely, after the successful suppression of the spread of Covid-19 and the increasing number of vaccinated population in the country, especially in industrial parks, tourism, and logistics from the expanding tendency of domestic demands for consumer products that are necessary for daily life. The construction industry will also return to its livelihood after the disruption because of the government’s lockdown measures.
The Monetary Policy Committee forecasts that the Thai economy in 2022 is likely to grow by 3.3 percent, under economic vulnerable conditions, especially in the service sector and self-employment. However, with the support from the Emergency Decree on Loans and the 2022 budget, it is expected that this will support a better spending trend. The country’s domestic inflation rate remains constant within the target frame, which is different from the inflation rate in the USA where it is likely to increase after seeing a possibility that the Federal Reserve may cut QE and raise interest rates in the near future.
Factors affecting economic recovery in 2022
- An increase in interest rates by the Fed. The action is expected to affect the amount of investments globally, despite being a gradual increase.
- The reduced travelers’ confidence from the latest virus epidemic.
- There is a tendency for an increase in the unemployment rate due to the decrease in income of labor in the service and self-employed industry.
- Persistent weak domestic consumers spending power.
- The number of vaccination for citizens in the country did not meet the target.
It is crucial for the government to build confidence in its citizens and businesses by speeding up vaccination to cover as many people as possible so that businesses can return to their normal operations and thus, more jobs will be created. Consequently, this will stimulate consumption and investments, particularly in industrial parks and industrial estates, which are the key forces in the creation of jobs and income for laborers. At present, BOI promotion and other privileges have already been implemented, but investors still lack confidence in the country’s ability to control and manage the Covid-19 situation internally.
Information source
- https://bbstore.bb.go.th/cms/1620611906_3624.pdf
- https://www.bot.or.th/Thai/ResearchAndPublications/articles/Pages/Article_5Jul2021.aspx
- https://www.morningstarthailand.com/mobile/Article.aspx?Site=th&articleid=212568
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