CIMB Thai has indicated it expects the Thai economy to grow by 3.2% this year. It acknowledges that Thai businesses will face a number of challenges next year, such as high inflation, rising interests, and a depreciated baht.
Mr. Amonthep Chawla, assistant managing director of CIMB Thai Bank, revealed CIMB Thai predicts the US and EU economies may enter recession next year. The recessions will not be severe and will not trigger a global recession. CIMB Thai expects the global economy to expand by 2.9% this year and 1.5% next year.
Mr. Amonthep, who is also head of the research office at CIMB Thai, said minor recessions of the US and EU economies present various challenges for the Thai economy. Growth of exports may hit negative territory because of diminished purchasing power in the US and EU. This would become especially apparent in the categories of automotive and parts, as well as computers and parts. Weakening purchasing power in the farm sector, grassroots sector, and from SMEs would result in diminished household purchasing power being prolonged. The Bank of Thailand is therefore expected to take the policy rate to at least 2% by mid-2023. Meanwhile, the US is expected to raise its policy rate to at least 5% by mid-2023. The significant difference between the US and Thai interests would prompt money flow toward the US dollar and suppress the baht’s value until mid-2023.
Mr. Amonthep noted that CIMB Thai expects a continual recovery in Thailand’s tourism sector. 10 million foreign tourists are expected to have arrived in Thailand by end-2022. This would increase to 20 million foreign arrivals in 2023. Supported by tourism, economic activities in Thailand are expected to continue expanding. CIMB Thai’s research office expects Thailand’s GDP to grow by 3.2% this year and 3.4% next year. However, it suggests small businesses hold on to spare liquidity in the face of slow growth in the world economy and an abundance of risks. It also suggests SMEs use technology to reduce costs, expand their online markets, and partner up with larger businesses. It also advises that members of the general public consider reducing unnecessary expenses with interests being on the upward leg. (NNT)