The recovery is continuing in Thailand. The rebound in private consumption and the gradual return of tourists should help, at least in the short term, to compensate for the slowdown in exports. However, the risks to growth remain on the downside, due to rising inflation, monetary tightening, the weakness in global demand and the absence of Chinese tourists. In the run-up to the elections in May 2023 political tensions could increase again [...]
Thailand’s economic growth prospects over the short and medium term are limited. Private consumption and the tourist sector, the main engines of growth, will remain weak for some time. In tourism in particular, it is highly unlikely that the activity levels of 2019 will return before 2024. Moreover, the structural weaknesses of the economy (lack of investment and infrastructure) have been worsened by the pandemic and will hold back the recovery, particularly in exports [...]
After a severe recession in 2020, economic growth will rebound moderately in 2021-2022. The main growth engines – private consumption and the tourism industry – were weakened by the abrupt shutdown of economic activity as of Q2 2020, and the dynamics of the recovery will continue to depend on the evolution of the health situation. As in 2020, the authorities will take advantage of the comfortable manoeuvring room built up prior to the crisis to provide economic support [...]
The economic rebound expected in H2 2020 has been slow in the making. For the moment, the pandemic seems to be under control, and there have already been several phases of reopening, but domestic demand remains sluggish. Exports also fell sharply again in May. Above all, it is the absence of international tourists that is straining growth prospects, at least in the short term, because fiscal and monetary support measures – though massive – will not suffice to totally absorb the shock [...]
The elections promised by the military regime ever since it took power in 2014 are finally slated to be held in 2019. Yet this does not mean that the political and social crisis has been resolved: the ruling junta intends to remain in power without providing a veritable solution for “national reconciliation”. From an economic perspective, short-term prospects are still upbeat [...]
Thailand is the second largest economy in the ASEAN (Association of Southeast Asian Nations) and has upper middle-income status. Thailand managed to maintain its relative fiscal strength and low external vulnerability, despite the sharp contraction of economic activity experienced in 2020. The economy’s strong resilience to shocks was proven once again.
Real GDP growth will be supported by manufacturing, good exports (although less than other ASEAN countries, as electronics exports represent only less than 15% of total exports in Thailand) and fiscal policy. Yet, internal demand is expected to remain weak in the two coming years. The tourism sector (while deeply affected in the short term) is highly competitive, the manufacturing sector should return to its pre-covid trends, and the banking sector is sound and well capitalized, which will continue to support funding to the economy.
Yet Thailand’s biggest threat to economic growth, and its main structural weakness, remains political risk. Thailand’s chronic political instability hampers the implementation of the structural reforms needed to adapt to an ageing population, the lack of infrastructure, and the growing risk that the country will remain mired in a middle income trap.
