Thailand: Economy returns to growth in Q4
The economy expanded 1.9% year on year in the final quarter of last year, contrasting the 0.2% contraction recorded in the third quarter and coming in well above market analysts’ expectations. As a result, the economy grew 1.6% in 2021 as a whole, rebounding from the 6.2% contraction clocked in 2020 but still notably lower than the growth recorded by all other ASEAN heavyweights last year. Meanwhile, on a seasonally-adjusted quarter-on-quarter basis, economic activity increased 1.8% in Q4, contrasting the previous quarter’s 0.9% fall.
Domestically, private consumption rebounded mildly, increasing 0.3% in Q4 (Q3: -3.2% yoy), while public spending growth hit an over five-year high of 8.1% in the fourth quarter, up from the third quarter’s 1.5% expansion. Meanwhile, fixed investment contracted at a softer pace of 0.2% in Q4, compared to the 0.4% decrease in the prior quarter.
On the external front, exports of goods and services growth improved to 17.7% in Q4 (Q3: +12.3% yoy), while growth in imports of goods and services eased to 16.6% (Q3: +29.5% yoy). As a result, the external sector contributed 0.5 percentage points to overall growth in Q4, improving notably from the 9.2 percentage point subtraction in Q3 and marking the first time the external sector has added to overall growth since Q4 2019.
Looking ahead, growth is set to accelerate in 2022, although it will still lag behind the majority of other large regional economies. The easing of pandemic-related restrictions and the release of pent-up consumer demand should spur household spending in the year, while easier entry requirements for international travelers should boost tourism figures, helping bolster exports in 2022. However, surging Covid-19 cases once again cloud the outlook, although the country’s relatively high level of vaccination should offer some protection against the pernicious impacts of the outbreak.
Regarding the outlook, Barnabas Gan, economist at United Overseas Bank, stated:
“We maintain our 2022 GDP growth outlook at 3.5%. This is against official range outlook of between 3.5–4.5%. High-frequency data such as the Purchasing Managers’ Index (PMI) at 51.7 in Jan 2022 (from 49.5 in December 2021) and persistently strong manufacturing momentum paint a favourable economic backdrop for Thailand. Nonetheless, we remain cautious over Thailand’s growth prognosis […]. For now, a tourism-revival must be present to usher in a resilient growth structure, even though tourism arrivals will likely be below pre-pandemic levels in 2022.”