Here are thetrends andrisk factors to watch out for in 2022.
Trend 1: COVID-19 currently affecting the public health and economy should gradually become endemic. The increasing vaccination rates at home and abroad will not only reduce severe infection cases but also mitigate the impact of the outbreak, allowing the economy to gradually return to normal.
Trend 2: Global liquidity is shrinking and global interest rates are rising as global inflationary pressures climb higher than expected, forcing major central banks, especially the US Federal Reserve, to withdraw economic stimulus and adjust policy interest rates, which will affect investments, financial costs, capital flows, and exchange rates around the world including Thailand.
Trend 3: Thailand may lag behind global economic recovery. However, the recovery should pick up the pace in the second half of this year, albeit with some uncertainty and uneven distribution, as domestic demand returns to normal and there is a return of foreign tourists.
Moreover, inflation in Thailand may rise to reach 3.5 percent in the first quarter due to surging energy costs and food prices, which would affect livelihood, especially low-income earners. In terms of monetary policy, the Bank of Thailand is likely to prioritize economic recovery over inflation and keep policy interest rates unchanged throughout the year. Differential between domestic and foreign interest rates will cause the baht to become more volatile, especially during a period of current account deficit.
The three major risks are:
Risk 1: The spread and mutations of Coronavirus may cause a new wave of outbreak, affecting economic recovery and tourism
Risk 2: China's economic slowdown from real estate sector problem and epidemic containment measure may affect global economic recovery and Thai economy, especially in exports, and
Risk 3: If inflation would not go down as anticipated, central banks around the world may be forced to raise interest rates and withdraw stimulus more than anticipated, which would subsequently affect economic recovery. We also need to keep a close eye on geopolitical issues that may drive a further surge in oil prices and pressure global inflation.
Source: Kiatnakin Phatra Financial Group