The Thai economy continued to recover from improving private consumption and exports of services.

The Thai economy continued to expand in Q3/2022.

The Thai economy continued to improve for the 4th consecutive quarter at 4.5% compared to the same period in the prior year. Such growth was partly supported by the base effect as economic conditions during Q3/2021 were hampered by strict COVID-19 curbs. In terms of the seasonally-adjusted quarter-on-quarter growth, economic conditions in Q3/2022 edged up by 1.2%(QOQ_sa), backed by better private consumption and private investment conditions, as well as robust tourism and service sector recovery prompted by the city and country re-openings.
With such regards, during the first 9 months of 2022, the Thai economy enjoyed a 3.1% growth.

Regarding the production approach, economic activities in various sectors saw a strong recovery with notable growth from the industrial sector, which returned to an expansion after contracting in the previous quarter. Meanwhile, the service sector continued to improve following the growing numbers of foreign tourist arrivals and strengthening domestic consumption. However, conditions in the construction sector continued to weaken due to slowing public construction. The agriculture sector also contracted as agricultural production was damaged by floods.

The Thai economy should continue to recover in Q4/2022.

EIC views that during Q4/2022, the Thai economy should continue to recover from strong tourism recovery. In 2022, approximately 10.3 million foreign tourists should enter Thailand from pent-up travel demand catalysts and easing international travel measures in various countries. Tourism growth should see significant boosts in Q4/2022 as the period is a high season for foreigners living in harsh winter countries to travel to Thailand. Furthermore, the growth of Thai visitors should also increase, thus improving the service sector in the big picture, especially tourism-related services, such as hotels, restaurants, and logistics.

Improving service and tourism conditions should support robust private consumption growth as economic activities and labor market conditions increasingly return to normal. During the year-end, merchandise exports should benefit from easing container and raw material shortages, especially semiconductors. However, Thai exports should continue to stall according to slowing global economic conditions during the year-end. Meanwhile, economic stimulus from the government may weaken as disbursements of only THB 42,000 million remained from the THB 500 billion Emergency Decree, approved in full by the cabinet.

EIC views that slowing global economic conditions and surmounting uncertainties will undermine Thai economic recovery in 2023.

Looking ahead to 2023, EIC anticipates that various uncertainties may increasingly cloud the global economy, including economic risks, policy risks, and geopolitical risks, in which such risks should weaken global economic conditions and also undermine the Thai economy by hindering the once robust export sector. Key export destinations that should see the most impact include China, with multi-dimensional challenges, and Europe and the US, which could enter a recession from late 2022 (Europe) and after mid-2023 (the US). Such conditions would inevitably hamper industrial production and private investment, especially those that are highly dependent on foreign markets. Furthermore, support from government stimulus packages  may fade following fiscal limitations that will prompt the government to be more cautious about spending.

 
In 2023, the Thai economy will see boosts from tourism and private consumption that will allow continual recovery amid surmounting global risks and uncertainties. However, the Thai economy would still face multi-faceted risks, including China’s implementation of the Zero Covid strategy that may continue for a longer than previously anticipated period, resulting in lower numbers of Chinese tourists visiting Thailand with slower recovery, as well as extending the global supply chain disruption. Other notable risks include high domestic inflation conditions that may be prolonged as oil prices remained high, increasing interest rates that may impair the ability of households to service debt on a wide scale, especially vulnerable groups, and potential political uncertainties arising from the Thai House of Representatives election in early 2023.