The economic recovery continued to pick up in Q2 2022, expanding by 2.5% (yoy), due to a stronger-than-expected boost in private consumption and tourism, which offset weak goods exports. However, among the major ASEAN economies, Thailand’s recovery has proven to be the slowest and inflation the highest. The rising cost of energy subsidies administered by the State Oil Fund may potentially add to public debt levels. The Thai baht strengthened due to expectations of a swifter economic recovery and the decline of the US dollar. 

The economy accelerated in Q2 2022, supported by private consumption and tourism recovery.
The economy in Q2 expanded 2.5% (yoy), up from 2.2% in the previous quarter. On a quarterly basis, GDP rose 0.7% (qoq, seasonally adjusted). Higher tourism receipts also supported the recovery, with exports of services expanding 54.3% (yoy).  On the supply side, a strong recovery of food and accommodation services added 1.6% to the GDP growth, but their contribution remained 14.5% below the prepandemic level. Manufacturing output contracted slightly, in line with the softening global demand.

Tourist arrivals in July increased further by 46% (mom) to 1.12 million, reaching 34% of the same period in 2019. The government expects international tourist arrivals to hit 8 million this year, reaching 20% of the pre-pandemic level. However, lingering concerns about future COVID outbreaks, the ongoing travel restrictions imposed by China, the slowing global economy, and the impact of the war in Ukraine on travel costs remain the key risks surrounding the tourism outlook.

The Thai baht strengthened due to greater optimism about the economic recovery and weakening sentiment on the US dollar as markets are growing skeptical about further aggressive Fed tightening.

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These results come after the World Bank appointing Fabrizio Zarcone, an Italian national, as its new Country Manager for Thailand, effective July 1, 2022. He succeeds Birgit Hansl, after four years of heading the World Bank office in Bangkok. Mr. Zarcone will oversee the implementation of the World Bank Group-Thailand Country Partnership Framework which is focused on key structural economic and social reforms to end poverty and boost prosperity.

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