Krungsri Research has upgraded its 2022 economic growth projection to 3.7% from its previous estimate of 3%, citing a sustained growth in exports and a foreseeable rise in private and foreign investment as the primary supporting factors.
Somprawin Manprasert, chief economist at the Bank of Ayudhya, said the economy will likely rebound to pre-pandemic levels in the second half of 2022.
The revised outlook is supported by prospective export growth, recovering household spending and retail sales, the emerging investment cycle, an improving tourism sector and accommodative monetary policies.
Mr Somprawin emphasised continual growth in exports and the new investment cycle as the key economic drivers.
"Exports were the key driver of recovery in 2021, and while they will remain crucial in 2022, investment will also arise as an important factor next year," he said.
According to Krungsri Research, exports are projected to grow 5% next year, exceeding the pre-pandemic average of 2.9% from 2001-19.
The growth will be spurred by the global recovery, higher demand for Thai products and regional economic cooperation such as the Regional Comprehensive Economic Partnership that will take effect early next year.
The partnership will allow Thailand to see 4.9% growth in incremental exports by 2030, according to an Asian Development Bank estimate.
The recent progress in the vaccination rate will permit Thailand to ease travel restrictions, allowing economic activities to resume and wages to rise by 5% in 2022, especially in sectors expected to sharply recover after the easing such as air transport and hotel businesses.
However, the tourism industry's recovery will be gradual and take roughly three more years to reach pre-pandemic levels as lingering pandemic uncertainties still incentivise many countries to maintain strict travel restrictions.
In addition, the recovery of private consumption will be uneven as many provinces will recuperate at different rates. Households within different income groups will also recover at their own pace with wealthier ones improving more quickly.
The country's economic recovery will be accompanied by a new business investing cycle as global investment gains momentum and causes Thailand's capital expenditure to rise accordingly.
The increase in expenditure allows several industries such as integrated circuits and semiconductors and machinery to operate above pre-pandemic levels.
The expansion of Thai industries will also directly be supported by rising foreign direct investment.
Although inflation significantly rose in the fourth quarter, it will subside in 2022 as it is caused by external factors, such as global commodity and oil prices that are expected to drop following central banks' tapering of stimulus packages and a decrease in pent-up demand.
Despite the hopeful outlook, there are imminent risks and challenges, including mutant strains of Covid-19, unwinding of the US monetary stimulus, supply-side constraints, geopolitical challenges and political turmoil.