Bank upbeat on GDP outlook

Bank upbeat on GDP outlook

Tim: Fiscal policy the main driver
Tim: Fiscal policy the main driver

Standard Chartered Bank expects Thailand's gross domestic product to rebound in 2022 to around 3% from the forecast zero growth this year.

The bank holds a positive view of the Thai economy next year, Tim Leelahaphan, economist at Standard Chartered Bank (Thai), said on Tuesday at the bank's press conference on the Thai economy.

He added that the bank might revise the 2022 forecast for the economy to higher than 3% if three factors send a clear signal of recovery. The factors are: the continued strong recovery of the export sector; a recovery of the tourism sector after the country's reopening on Nov 1; and a recovery in domestic consumption.

Mr Tim added that the bank will keep a close watch on whether Thailand can successfully contain the Covid-19 pandemic outbreak one month after the country's reopening. If it does well, the bank might revise its forecast for economic growth in 2022 next month.

He said that next year fiscal policy will continue to be the main economic driver, especially in the post-Covid environment, and he wants to see the government continuing to introduce fiscal policies to stimulate domestic consumption and local investment.

He added that one challenge next year is how the Bank of Thailand will keep its policy rate on hold at the current level of 0.5% to support the economy and businesses when global central banks are starting to hike their interest rates.

The bank expects Thailand's exchange rate this year to be at an average of 32.5 baht against the US dollar. It also expects the currency during the first half of 2022 to move around the 31-32 baht range, on the back of the country's reopening and the tourism recovery, among other factors.

He added that some external and internal factors may cause volatility for the baht in 2022. The US Federal Reserve's looming interest-rate hiking cycle is a key point to monitor. US-China relations may come back into focus in the post-Covid world, Mr Tim added.

He suggested the government should launch measures to attract more foreign investment to Thailand post-pandemic, and woo Thai businesses that have invested overseas to come back to invest more in their home country.

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