Thai Economy is currently chugging along in choppy waters as China’s problems grow and the US dices with recession. However, the key worry is, increasingly, the danger of a growing economic downside in China where a property market valued at twice the US national debt has already fallen by 40% threatening to deepen an already existing banking crisis.
Thailand still aims for 3% to 3.5% growth this year while, unlike many western countries, planners are confident of reining in inflation towards the end of the year while maintaining steady export growth and driving a recovering foreign tourism industry. The key threat facing the kingdom and one that is still emerging is a deteriorating Chinese economy and the possibility of a shock wave created by a collapse of the Chinese property sector, in addition to rising insecurity caused by heightened tensions between the United States and its western partners and Thailand’s strategically important trading partner to the north.
The jury is still out on whether the United States will enter a recession this year despite a technical recession in the opening quarter of 2022 and signs that rising interest rates are starting to dampen demand.
This is a key factor for Thai economic planners as the United States is the country’s biggest export market as well as being a key investor and potential economic ally going forward as prospects begin to dim for China.
Thailand’s export growth slowed to 4.3% in July as the country’s current account deficit also widened to $4.1 billion despite over 1.2 million foreign tourists being recorded as part of the steady but slow recovery of the sector.
The key reason for the reduction in what was robust export growth was the disruption caused by supply chain problems in China and demand from the world’s second-largest economy.
The reason for this was primarily disruption caused by shutdowns in China due to Beijing’s increasingly authoritarian response to the virus emergency which is ongoing and has been critical areas of economic activity and production being shut down in rolling waves.