3 scenarios that might affect Thailand’s economic growth
The National Economic and Social Development Council (NESDC) reckons the Thai economy can be affected by three scenarios taking into account the ongoing Russia-Ukraine war and other geopolitical conflicts.
The first and most probable scenario, NESDC Deputy Secretary-General Wichayayuth Boonchit said, is if the Russia-Ukraine war continues, but the global oil supply is not affected by sanctions against Russia. In this case, Thailand’s economy should expand between 2.5 and 3.5 per cent this year. Thailand’s GDP currently stands at 1.6 per cent, according to the World Bank.
“Thailand’s inflation should drop slightly in 2023, while the current account will build up gradually,” he said.
He also expects the global economy to expand this year before slowing down next year based on the interest rate directions and the cycle of major economies. He believes the global economy should start to recover after 2023.
In the second, but less probable scenario, Wichayayuth said, Thailand's economy will grow less than expected in 2022-2023 if more sanctions are slapped on Russia. This will result in a surge in the global price of oil and other products.
“The inflation this year will be higher than in the first scenario before declining,” he said, adding that the current account will have a higher surplus than in the first scenario.
He also expects the global economy to grow at a lower level next year depending on the types of sanctions. He added that economies in Europe, the UK and the US face the risk of recession.
The third and worst scenario is if a conflict is sparked between the US and China. Wichayayuth said this conflict will spark a global economic recession depending on the intensity of this and other geopolitical conflicts.
Should a US-China conflict arise, it will push up the price of fuel, food and consumer goods and even trigger shortages.
"Thailand's inflation will remain high, with the current account balance in deficit,” he said.