Thailand’s GDP growth forecast slashed due to fallout of war
Kasikorn Research Centre (KResearch) has lowered Thailand’s GDP growth forecast for the year from 3.9 per cent to 2.5 per cent this year, as adverse impacts from the ongoing military crisis between Russia and Ukraine are likely to continue throughout 2022.
Western countries’ boycott measures against Russia are expected to keep average crude oil prices at about US$105 per barrel throughout the year, Deputy Managing Director, KASIKORN RESEARCH CENTER Co., Ltd. (KResearch) Nattaporn Triratanasirikul said.
She said this would result in Thailand’s GDP expanding only by about 2.5 per cent, although a higher growth of 2.9 per cent was likely if the conflict ends within the third quarter and oil prices come down substantially to about $90 per barrel in the second half of the year.
Thailand would see higher inflation of up to 4.5 per cent and there would be pressure on the Bank of Thailand to increase the policy interest rate, due to greater possibility of the US Federal Reserve raising its key interest rate before the year-end, the KResearch executive said.
Meanwhile, KResearch Deputy Managing Director, KASIKORN RESEARCH CENTER Co., Ltd. Ms. Kevalin Wangpichayasuk said that the Russian-Ukrainian crisis would mainly affect the business sector, with minimal impact on consumers.
The industrial sector would see production costs increase by THB80 billion, she said.
Also, the Thai tourism sector would suffer from a decline in visitors from Russia and other European countries, although as many as 4 million arrivals are expected this year following relaxation of Covid-19 preventive measures, according to Kewalin.
“Tourist expenditure is expected to decrease by THB50 billion when compared to a no-war scenario,” she said.
The services sector would also be impacted, while the automobile, electronics, retail and restaurant industries would see smaller expansion this year due to the war, the KResearch executive added.
KResearch deputy managing director Thanyalak Vacharachaisurapol said that the financial boycott of Russia has resulted in decreased trade volume between Thailand and the two warring countries.
Also, there have been fluctuations in the Thai capital markets with higher cost of fund-raising, she noted.
