Chamber of Commerce slashes Thai growth outlook over global inflation

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The University of the Thai Chamber of Commerce (UTCC) lowered Thailand’s economic growth forecast for 2022 to 3.1 per cent on Thursday, citing growing inflationary pressures.

The UTCC’s previous forecast was 4.2 per cent growth in November last year, when the Russia-Ukraine war had not yet disrupted the global energy and commodity prices.

“Growing inflation has weakened demand across the world and forced the governments of major economies to raise interest rates,” said Wichian Kaewsombat, assistant director of the UTCC’s Centre for Business and Economic Forecasting.

For the worst-case scenario, UTCC predicts that the Thai economy might grow by only 2.3 per cent in 2022 given that average global oil prices hover around US$130 per barrel and the Thai government fails to curb the domestic diesel prices. 

“The worst-case scenario has a 10 per cent chance of occurring,” UTCC president Thanavath Phonvichai said. “Every baht increase in diesel prices per litre would pull down the GDP by 0.2 per cent.” 

The UTCC revised up the nation’s exports growth from 5.4 per cent to 6.3 per cent in 2022 thanks to post-Covid recovery and the weakening of the baht, while raising the inflation forecast from 1.5 per cent to 6 per cent.

Thanavath said he expects more foreign visitors in the second half of this year in light of easing entry rules. He forecasted the full-year tourist number at 6.1 million, which is still substantially below the pre-Covid levels of 40 million. 

“The key drivers of the Thai economy are still exports and tourism,” Thanavath added. “While the legalization of cannabis and hemp may not have a role in this.”

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