Domestic demand, tourism and exports to spur Thai economy: NESDC
The overall economic outlook for Thailand this year remains positive, but inflation, global tensions, increasing interest rates and debt continue to pose a threat to the country's growth, the National Economic and Social Development Council (NESDC) has said.
The NESDC announced that Thai gross domestic product (GDP) in the second quarter of 2022 had expanded by 2.5 per cent year on year, accelerating from a 2.3 per cent growth in the previous quarter.
After seasonal adjustment, the economy grew 0.7 per cent from the first quarter of 2021. In the first half of 2022, the economy grew by 2.4 per cent.
The expansion of private consumption expenditure and service exports, as well as the recovery of the tourism industry following the easing of Covid-19 control measures, have enabled economic activities and spending to return to normal levels, with support from consumption stimulus measures.
Meanwhile, there are some geopolitical risk factors to consider. The increasing tensions between China and Taiwan will have an impact on the country's semiconductor imports. Semiconductors are key components in the country's automobiles, integrated circuits and parts, electronic appliances, and computers, the NESDC said.
If China tightens sanctions and hinders shipments, Thailand's automotive and electronics industries may suffer, slowing their growth, NESDC secretary-general Danucha Pitchayanun said.
Currently, Thailand imports 29 per cent of semiconductors from Taiwan, he said.
In addition, the prolonging Russia-Ukraine war, the risk of a Covid-19 pandemic and monkeypox, interest rate hikes, and China's economic slowdown are the main factors to be closely monitored.
The council also suggested that the government monitor and accommodate market mechanisms to bring domestic prices in line with input costs, support agricultural production and farmers' income, resolve retail debt in the face of rising interest rates, maintain momentum in the export sector, catalyse the recovery in tourism and related service sectors, and prepare for global economic and financial market volatility.
Besides, supportive policies for small and medium-sized enterprises (SMEs) are required to sustain Thailand's long-term growth.
Overall, the NESDC projected that the Thai economy would grow by 2.7 to 3.2 per cent in 2022, owing primarily to increased domestic demand, the recovery of the tourism sector, and the continued expansion of goods exports.