Krungthai Compass, a research house under Krungthai Bank (KTB), predicts the Thai economy will start to recover next year with a growth rate of 3.8%, rising from a forecast of 1% this year.
The 3.8% growth rate for GDP in 2022 would be supported by domestic consumption and private investment, in line with improving confidence of both consumers and businesses, said chief economist Patcharaphot Nuntramas.
He said the country's vaccination rate, with around 60% of the population receiving two doses, and Thailand's reopening from Nov 1 are the key factors boosting both consumer and business sentiment.
The research house forecasts private consumption growth would increase to 3.8% in 2022 from a contraction at 0.4% in 2021, while private investment would grow 6.5% next year from 2.6% growth this year.
"Both the public and business operators are now familiar with how to handle Covid-19 outbreaks, changing their behaviour to use digital platforms," said Mr Patcharaphot.
Krungthai Compass also expects the Omicron variant will not impact the economic outlook significantly next year. Current vaccines are expected to protect against severe illness, hospitalisations and death from Omicron infection.
The recovery path of the Thai and global economies should also support the country's tourism, said the research house.
Krungthai Compass estimates foreign tourist arrivals to increase to 5.8 million next year, up from an expected 400,000 this year. A significant uptick is expected in the second half of 2022.
However, it will take a few years for foreign tourist arrivals to return to the 2019 tally of almost 40 million, said the think tank.
The Bank of Thailand is expected to keep the policy rate unchanged at 0.5% throughout next year to support economic momentum.
Mr Patcharaphot said Krungthai Compass predicts the US Federal Reserve will start raising its policy rate from the second half of 2022, hiking the rate for two rounds in the second half next year, in line with the US economic recovery.
The Fed should not face inflationary pressure and this factor should not pressure the Thai economy either, said the think tank.
In addition, the research house predicts the baht will gradually appreciate against the dollar in the second half next year.
A stronger baht would be in line with Thailand having a higher current account surplus because of rising foreign tourist arrivals. The local currency is expected to reach 31.75 baht to the greenback at the end of 2022.