KKP Research has assessed that the economy will gradually recover from a low base. GDP is expected to grow at 3.3 percent as domestic consumption and investment start to return to normal, export grows with the global economy, tourism revives faster than expected, and agricultural revenues improve with rising oil and commodity prices.
However, the recovery of the Thai economy is still worrying due especially to uneven recovery. Many economic sectors have not yet returned to the pre-COVID-19 state. In addition, the Thai economy is facing the risks from inflationary pressures and rising cost of living while income and economy have not fully recovered. Interest rates are on the way up as a result of inflationary pressures and central banks around the world pushing to raise interest rates. A possible global economic slowdown or recession in the near future may also affect the pace of recovery of the Thai economy.
"Over the past several decades, interest rates have continued to drop. After this, this period of low interest rates is about to end. However, the recovery of the Thai economy is still fragile and uneven. Many sectors have not yet returned to the state before the COVID-19 crisis. Households and businesses are still affected and have trouble paying back their debts. The important question is how do we prepare for this new world." said Dr. Pipat.
In addition to short-term factors, the Thai economy is facing several structural challenges that hold back the economic growth and put the country at risk of losing competitiveness while environmental factors such as technological development are changing rapidly. Therefore, a solution for the Thai economy in this new world is economic restructuring to increase competitiveness. The country will also need to support investments, promote research and development, upgrade the quality of education and labor skills, liberalize labor and services, reduce monopoly, and improve economic and political institutions to reduce opportunity gap.
Source: Kiatnakin Phatra Financial Group