Global economic volatility next year will affect the Thai economy, especially for small and medium-sized enterprises (SMEs) that have yet to recover from the impact of the pandemic, says Supavud Saicheua, adviser to Kiatnakin Phatra Financial Group.
The domestic economy faces an uneven recovery next year, he said yesterday at the Line Thailand Business 2022 annual seminar.
Mr Supavud said starting from the second quarter next year, that period will indicate whether the local economy would perform well or decline.
He said predicting next year's outlook is difficult, but he proposed good and bad scenarios for 2023.
The best-case scenario is US inflation falls rapidly and the global economy does not decline significantly, while China fully reopens. In this scenario, Mr Supavud said Thailand records a current account surplus in the first quarter next year thanks to rising foreign tourist arrivals and a smooth general election.
The worst-case scenario is the US Federal Reserve raises its policy rate to 5%, but this still fails to tame inflation, while the risk of a global recession becomes clearer. China maintains its zero-Covid policy, resulting in Beijing's economic growth dipping to 3-4% from anticipated growth of 5% in 2023, he said.
Meanwhile, the number of foreign tourist arrivals in the second quarter next year is lower than projected, while the Bank of Thailand has to accelerate its policy rate hikes to tame inflation. Moreover, there is no election in Thailand in the second quarter, or the election occurs but the winning parties fail to form a government, said Mr Supavud.
He said the Thai economy is heavily dependent on the global economy, as imports and exports account for 50% of the country's GDP. If the US, the eurozone and China have economic problems, this will impact the Thai economy, said Mr Supavud. In addition, local SMEs have yet to recover from economic hardships.
Thailand targets 20 million foreign arrivals next year, of which 1 million are expected to be Chinese. If China allows more outbound travel next year and Chinese arrivals here tally 5 million, it will benefit the economy, he said.
