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This story is part of Forbes’ coverage of Thailand’s Richest 2022. See the full list here.
Rising inflation—as Thailand’s tourism industry shrugs off the impact of Covid-19—is expected to hamstring economic growth in 2022. Consumer prices have accelerated faster than expected since the beginning of the year, hitting a 14-year high in May, and will get in the way of a hoped-for rebound in household spending. That plus Russia’s war in Ukraine and a slowdown in China (a main export destination) led the government to sound a cautious note and lower its growth forecast for the year. GDP is now set to expand 3.4% in 2022, 4.3% in 2023 and 3.6% in 2024.
The central bank signaled it will scale down “a very accommodative monetary policy” to contain inflation. The concern is that a hike in interest rates will deepen the drag on domestic consumption.
At the start of June, Thailand announced a $1.6 billion bond issue to address the budget deficit, which is expected to have ballooned to 6.7% of GDP in the second year of the pandemic, before falling back to 4.6% this year. Prime Minister Prayut Chan-o-cha’s government is placing its hopes on a $93 billion budget bill for 2023 to help boost Southeast Asia’s second-largest economy. But critics say it could be a debt trap that benefits a few, arguing for investments that strengthen the economy long term.