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Thailand’s economic growth continues in Q2 but risks ahead

Thailand’s economy could grow at the fastest pace in the last quarter of this year, according to a Reuters poll, as tourism increased due to a slowdown in Covid cases. Reuters polled that tourism and less restrictions as curtsies lifted were two major economic growth factors for Thailand. However, increased cost of living or a slowdown in China also pose many threats to the country’s current economic outlook.

The median forecast estimates that growth for the second quarter of this year is at approximately 3.1% annually, up from 2.2% in the previous quarter.

But each quarter, the gross domestic product (GDP) grows a seasonally-adjusted 0.9%. It’s only slightly slower than a preceding quarter 1.1% and economists are predicting an average (median).

There are varying forecasts for how Southeast Asia’s economy will recover from the deadly pandemic. These forecasts range from 0.1% to 1.3%. More data will be released on Aug. 15th, and this uncertainty is highlighted by the forecast variations.

Thailand tourism is so vital to the economy. With that in mind, a faster-than-expected revival should lift the economy overall.

The tourism sector’s heavy reliance on Chinese tourists suggests a while before they can return to pre-pandemic numbers.

Thailand received 1.07 million foreign tourists in July, up from 767,497 the previous month. Thailand’s tourism-reliant economy likely to have improved in the second quarter.

The government estimates that this year will see an increase in international tourist arrivals, which they attribute to a projected 3.3% growth of Thailand’s economy. The Prime Minister has said that the country’s recovery is expected to continue at 4.2%.

But an ongoing COVID-19 situation in China, which still pursues a zero COVID strategy has increased the risk for global recession. That’s along with a slowdown of the world’s second biggest economy.

DBS said that the heightened fears of a global recession in an uncertain environment could act as a drag on Thailand’s economy and pose downside risks to the company’s forecast on growth.

The Thailand economy is expected to grow 3.4% this year and accelerate to 4.1% in 2023 before slowing to 3.5% in 2024. This result was obtained from a Reuters survey conducted recently.

Although the inflation rate has seen a slight decrease, it still remains an issue. Although 7.61% is lower than what was seen in June, it is still very high and is much higher than the target range of 1%-3%.

Standard Chartered’s economist, Tim Leelahaphan, does not foresee a clear decrease in inflation.

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