Thai finance ministry maintains 2022 GDP forecast as Covid eases

Thailand’s finance ministry on Friday maintained its economic growth outlook this year as the easing Covid-19 situation is expected to support local spending and a tentative resumption of tourism.

The ministry maintained its forecast for 2022 gross domestic product growth at 4%, according to Pornchai Thiraveja, director general of the ministry’s fiscal policy office. It also revised its 2021 estimate to 1.2% expansion from 1%, supported by exports and fiscal measures.

Southeast Asia’s second-largest economy has tried to support a fragile recovery by reopening its borders to foreigners after the pandemic wreaked havoc on the crucial tourism sector over the past two years. The government will resume its quarantine-free visa program next week, after pausing since late December on concerns about omicron.  

Thailand is also facing higher consumer prices, but at levels seen milder than most economies, particularly the U.S. Headline inflation is expected to accelerate 1.9% this year, the ministry said Friday, up from its earlier estimate for 1.4%.

The ministry also said the omicron variant will impact tourist arrivals this year, especially in the first quarter, although it retained its outlook for 7 million arrivals.

Steady Improvement

All regions of the country have been showing signs of improvement, the ministry added, with both consumption and private investment rising month-on-month in December. It forecast the baht to average 33.10 to the dollar this year, weaker than its 32.70 outlook in October.

Thailand saw new cases jump to around 8,000 per day after Christmas and New Year because of omicron, but that’s far below the peak seen during the delta wave in August and hasn’t overwhelmed the health-care system.

The Bank of Thailand last month cut its forecast for 2022 to 3.4% GDP growth, from 3.9%. In November, the National Economic and Social Development Council forecast 3.5%-4.5% growth this year.

Thailand welcomed 230,497 foreigners in December, the highest monthly figure since March 2020, before the country shut its borders. Still, the total of 427,869 foreign visitors in 2021 was a fraction of the 40 million who came in 2019, which generated more than $60 billion in revenue for the tourism industry.

Exports this year are expected to rise 3.6%, the ministry added Friday, while imports will gain 5.4%.