Page 34 - FoodFocusThailand No.190 January 2022

SPECIAL REPORT
SPECIAL REPORT
Thailand’s economy after

the easing of

lockdown measures

Many countries around the world, including Thailand,
have begun to resume economic activity. However,
it may not expand as much as the economic growth in the
pre-crisis period. This was because the mutated version of the
coronavirus outbreak called Omicron could spread faster than any of its
predecessors, such as the Delta variant. It is a new challenge in addition to the
existing one, posing a greater risk to the global economy in early 2022. Therefore,
the economic recovery has been slower than expected, and it is predicted to continue
until the first quarter of the year.

The global and Thai economies’ outlooks after the out economic activities, with a positive factor from the opening of the country
easing of lockdown measures to a total number of 133,061 tourists in November. Moreover, public spending
The global economic landscape has gradually recovered following from those with purchasing power in the country in terms of consumption,
the rate of vaccination and the government’s policy of opening the investment, and tourism, which resulted from the distribution of vaccines to
country. However, they are faced with numerous uncertainties when more than 70% of the population, has caused the recovery of the economy.
the new wave of Omicron infection has quickly spread from African As for the financial condition, there has been an overall tendency to increase
countries to several countries, including Thailand. Consequently, inflation. The main reasons are the fuel price fluctuations following crude
Omicron became a new risk to economic growth in early 2022, leading oil in the world market and the increasing price of food products, especially
to a slow recovery of the global economy. The Economic Intelligence fresh vegetables (up 12.7%) and seasoning (up 6.2%). However, the
Center (EIC) reported that the global economy is projected to grow Monetary Policy Committee (MPC) will maintain the policy interest rate at
5.8% in 2021 and drop to 4.1% in 2022, but both are still above the 0.5% throughout 2022 to bring inflation towards the target and support the
pre-coronavirus average, which accounted for 3%. Notably, there economy through this period.
are five significant trends in the international economy that affect the
macroeconomic growth of the entire global economy: The Export situation of Thai agricultural products
(1) For durable goods and commodities, there is a demand- Thailand’s export sector has begun to expand quite well. In 2021, the EIC
supply mismatch as a result of the continual growth in new orders Research Center predicted Thai exports would continue to grow by 16.3%,
during the pandemic situation, while delivery times are longer. This a slight increase from 15% which was a continuous expansion. In 2022,
status is reflected in supply-chain disruptions in both production and Thai export growth will remain slow at 3.4%, in line with the global economy
transportation, as well as the labor shortage that caused rapidly rising that has severe uncertainty, and the Omicron appears to be spreading.
inflation in 2021. According to data collected by the Krung Thai Bank Research Center in the
(2) The COVID-19 issue has resulted in a heavier debt burden third quarter of 2021, the export value of Thai agricultural and agro-industrial
around the world. To maintain liquidity, debt-to-GDP ratios have been product exports was 11,405 million USD or increased by 19.8%. This was
rising in the government, business, and household sectors, which due to the recovery of trading partner economies, especially China, which
tends to hold back economic recovery in the future. is an important export market for Thailand, and the depreciation of the baht,
(3) Monetary and fiscal policy are likely to remain tight in the which raised demand for agricultural products. The products with the best
aftermath of high inflation. As a result, the United States Federal expansion included rice, rubber, cassava, chilled, frozen, and dried fruits,
Reserve (Fed) may raise the policy interest rate at least twice by the as well as agricultural industrial products such as seasonings. In contrast,
middle of 2022, which could possibly lead to baht depreciation in the sugar, canned seafood products, and processed foods continue to slow
first half of the year. down due to the stockpile reduction of trading partners. The important
(4) Changes in consumer behavior have allowed new agricultural and agro-industrial product export volume of Thailand is shown
technologies to emerge in almost every industry, and together with in Table 1.
the future of remote work, they will determine the direction of the The coronavirus epidemic is a key factor in determining the direction of
economy. the global and Thai economies. After more than two years of dealing with
(5) There will be a transition to a net-zero society in terms of the challenges, many countries have begun to adapt to the situation, and
environmental friendliness and greenhouse gas emissions reduction COVID has been shifted from pandemic to endemic in various locations.
across the supply chain. Although the Thai economy is still fragile at this time, the industrial sectors
The Kasikorn Research Center expects a recovery of the Thai such as tourism, manufacturing, and exports send a good signal that the
economy in 2022 at 2.8-3.7%, depending on the spread of Omicron Thai economy is recovering and has passed its lowest point. Many parties
species, the vaccine effectiveness, and the severity of the disease. estimate that the Thai economy will return to equivalent levels before the
Meanwhile, the EIC Research Center has downgraded the economic crisis (2019) in the middle of 2023.
forecast for 2022 by only 3.2% following a drop in international tourist
arrivals and the impact of the pandemic as well. The Thai economy
in the last quarter of 2021 was slightly recovered and able to carry
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