Thailand to post GDP growth of 3.2% in 2022 and 4.5% in 2023 (Fitch)

Thailand’s economic recovery is strengthening, although rising inflationary pressures and slower global growth pose risks to the near-term rebound, according to Fitch Ratings’ analysts at its 2022 Thailand Sovereign and Bank Outlook Webinar.

Jeremy Zook, a Director of Asia-Pacific Sovereigns at Fitch said in his presentation that he expects Thailand to post GDP growth of 3.2% in 2022 and 4.5% in 2023, underpinned by steady improvements in tourism and domestic demand – while highlighting that higher inflation and slowing global growth were downside risks to the forecast. Thailand’s ‘BBB+’/Stable rating reflects the country’s sustained external finance strengths and a strong macroeconomic policy framework – which should help it to manage potential volatility amid tighter global credit conditions.

Zook said some other south-east Asian economies, such as Vietnam (BB/Positive), may see a strong recovery in GDP growth. He forecast Vietnam’s economy to expand by 6.1% in 2022 and 6.3% in 2023, boosted by rising exports and domestic consumption. However, slowing global demand is a downside risk. Laos (CCC) is under acute pressure from a commodity price shock, which led to foreign-exchange liquidity shortages and a sharp depreciation of the local currency, Zook added.

RelatedArticles

Thailand’s Consumer Outlook: Stable Medium-Term Prospects Despite Short-Term Political Challenges

December 17, 2024

S&P Confirms Thailand’s BBB+ Credit Rating, Stable Outlook Maintained

December 16, 2024

China Kicks Off Its Annual Economic Conference

December 15, 2024

Thailand Plans Tax Reforms to Boost Investment and Promote Economic Equity

December 12, 2024

Parson Singha, a Senior Director of Financial Institutions at Fitch Ratings Thailand, commented that bank earnings are improving, although upside is constrained as economic activity remains low compared to pre-pandemic levels. Fitch expects impaired loans to rise during the year as regulatory relief fades, although high loan-loss coverage should reduce the need for additional provisioning.

Vietnamese banks’ prospects may benefit from favourable economic conditions, said Singha. Loan growth remains strong, which will support near-term asset quality and profitability metrics. However, rapid growth also means that capital buffers are likely to remain thin, which leave banks vulnerable to unexpected shocks.

A replay of today’s briefing will be available shortly at www.fitchratings.com/region/thailand