The Federation of Thai Capital Market Organizations (Fetco) predicts that global and domestic inflation will begin to fall this year, while global interest rates will peak next year and start to decline in 2024.
Thailand should avoid a recession because of its strong recovery in tourism, though the International Monetary Fund (IMF) expects 25% of emerging markets to face an economic and financial crisis in 1-2 years, according to Kobsak Pootrakool, chairman of Fetco and senior executive vice-president at Bangkok Bank.
He said volatility in both money markets and stock markets will continue because a recession will begin next year.
The US will continue to raise interest rates until inflation drops to target levels. But when interest rates reach a certain level, some emerging markets will face difficulties and may have to borrow funds from the IMF, said Mr Kobsak.
Countries that have already borrowed from the IMF comprise Pakistan, Afghanistan and Sri Lanka, while Ukraine is under consideration.
Foreign media reports the countries most likely to face a crisis include those with high domestic inflation, a weak currency, and very high credit default swap rates, such as El Salvador, Ghana, Tunisia, Egypt, Kenya, Argentina and Ukraine.
He said Thailand may be safe from this round of crisis and is expected to recover well due to the tourism business and exports starting to recover this year.
The Tourism Authority of Thailand expects at least 18 million foreign visitors in Thailand next year, excluding those from China. If the number could increase to 25 million, it would help enable GDP to expand to a greater extent.
Mr Kobsak said the Investment Analysts Association expects the SET Index to range from 1,585-1,709 points this year.
He said a survey of investors and market participants revealed the investor confidence index, which anticipates market conditions over the next three months, stood at 108.9 in October, up by 60.5% from the previous month.
The investors expect the tourism recovery to be the most supportive factor driving confidence, followed by anticipation that the US Federal Reserve would slow down its pace of interest rate hikes and local economic recovery, according to the survey.
However, uncertainty over the Fed's policy of raising interest rates, the development of inflation and the Covid-19 situation, respectively, were investors' leading concerns.
The most attractive sector to investors is tourism and leisure, with the least attractive being petrochemicals and chemicals. The biggest impediment to the SET is uncertainty over the Fed's interest rate hikes.
External factors to monitor include clarity on the Fed's policy of raising interest rates, foreign exchange fluctuation that caused several central banks to intervene, particularly the Bank of England and the Bank of Japan, and a trend of economic recession, especially in emerging markets. In addition, China's economic slowdown as a result of its zero-Covid policy and the lingering Russia-Ukraine war were still capturing attention.
Local signs to track include any export slowdown, rising imports of goods from China that may impact Thai firms, the baht's depreciation and a sharp decline in foreign reserves as a result of US dollar appreciation.
