CIMB Thai Bank, stated that the Thai economy in the third quarter was full of opportunities and challenges, with the fourth quarter likely to grow nearly 5%. Therefore, the overall direction of the Thai economy is likely to recover. clearly in the second half of the year
Dr. Amornthep Javala, Executive Vice President research office executive and investment adviser, CIMB Thai Bank, revealed that The Thai economy in the third quarter is likely to expand by 3.0% compared to the same period last year. and see that the fourth quarter It has a chance to grow close to 5%, so looking at the picture of the Thai economy, it should recover clearly in the second half of the year.
The factors that support the Thai economy to grow rapidly come from 3 factors.
1. The number of tourists is expected to recover faster than expected. and recovering faster than seen in the first half of the year Whether it is many countries that have started to return to the same number of tourists as before before COVID, such as Malaysia, India, South Korea, Europe, Russia. Have to wait for more Chinese tourists But believes that there are more chances to come back Good results should have on the service business, hotel groups, restaurants, transport (airlines), retail, especially in the upper market, such as 4-star hotels and above, and should be seen more spread in Bangkok and Phuket to other tourist destinations such as Pattaya, Samui, Krabi, etc.
2. The export sector that is likely to turn positive After continuing to be negative at the beginning of the year saw a recovery in the electronics industry and automotive parts should support a better investment sector Continuing good employment which further supports the consumption sector The group that is expected to recover well in the third quarter should be in the group of processed food and processed agriculture. It benefited mainly from a recovery in demand in China.
3. The price of oil in the world market is likely to stabilize. or come back a little shortened according to the US and European economic factors that are likely to grow at a slower pace The drop in oil prices is likely to help reduce the cost of living for people in the country. Supporting inflation tends to stabilize and continue to decline. In addition, other commodity prices tend to stabilize or decrease in line with oil prices. This should help reduce agricultural costs from falling animal feed prices and the construction sector from stable material prices. but may not be much because of the drought caused by El Nino conditions
However, the Thai economy in the third quarter has risks that may cause the recovery to be interrupted by 3 factors.
1. Uncertainty in forming a government there may be a delay The impact on the economy is that foreigners wait and see before returning to invest in Thailand. May cause Thailand to lose the opportunity of moving the production base from China to Thailand. in key industries Sometimes we may lose the opportunity to speed up free trade negotiations (FTA) with European countries or key trading partners. As a result, foreigners investing in Thailand Consider relocating to Vietnam or another country. If our situation is still unfavorable To benefit from the establishment of a production base in the country. In addition, government expenditures Government investment budget may continue to decrease affecting the confidence of domestic investors When the Thai private sector has yet to see new public investment projects, the private sector may slow down construction and affect this sector. Except condominiums at the level of 3 million baht along the extension line of the electric train that can still go on.
2. The global economy slows down, especially the Chinese economy. We saw a picture of China’s economic growth accelerating in the first quarter at 4.5% after China opened its cities and people accelerated consumption, but began to see signs of a continued slowdown. Both the export sector turned negative. The manufacturing sector began to grow at a slower pace. Including the spending of the people in the country itself is not as strong as the beginning of the year. The government itself has begun to find measures to stimulate the economy, such as reducing interest rates in the past. May be enough to support the economy to some extent. But the picture of the Chinese economy that is at risk of slowing down, the trade war and the technology war with the United States in which the United States tries to pressure the Chinese economy to grow well, especially Chinese exports in the future and there may be pressure in the manufacturing sector of China Which affects the slow growth of China’s export and manufacturing sectors will put pressure on Thailand’s exports and tourism sector in the third quarter.
3. The US Federal Reserve (Fed) is likely to continue raising interest rates over the long haul. Due to the problem of inflation, there is a high level of pressure. Energy and food price inflation (core inflation) continued to decline relatively slowly. There may be a possibility that the Fed will continue to raise interest rates. It may not go up every meeting round or it may go up and then pause. Causing interest rates to be higher than the market expected at 5.75% and the opportunity to reduce interest rates this year may disappear. It is likely that capital will move out of Thailand back to the US, causing capital volatility. and causing the baht to weaken to the level of 35.50 baht per US dollar. affecting the cost of living in the country one more step While the Monetary Policy Committee (MPC) ) of Thailand, there is a chance to raise interest rates again to support future inflationary pressures. But may think that we do not need to raise interest rates around the August meeting. But there may be spaces to wait for clarity on economic recovery and political policies. as well as assessing the impact of the high level of household debt and the remaining risk of default. before the next monetary policy adjustment in September to 2.25%
“We believe that the Thai economy will recover gradually in the third quarter. Including a clear sign of recovery in the fourth quarter, it is possible, but if the prospects of recovery are likely to be positive, the Thai economy will expand 3.3% this year as expected, ”said Dr. Amornthep.
Source: Thai News Agency
