Inflation in Thailand Reaches 5.9% a 24 Year High

Inflation in Thailand is projected to rise from 4.9% to 5.9% this year, the highest in 24 years, according to the Siam Commercial Bank.

Inflation is set to peak at 7% in the third quarter, before falling as domestic output increases and global economic conditions deteriorate the Siam Commercial Bank reported.

According to the bank’s Chief Economist, Somprawin Manprasert, the Economic Intelligence Centre has revised Thailand’s economic growth forecast from 2.7% to 2.9%.

Thanks to the tourism economic engine, which will see foreign arrivals increase from 5.7 million to 7.4 million by year-end, as a result of the further loosening of travel restrictions and improved performance in the service sector.

Export growth, however, may decline from 6.1% to 5.8%.

According to EIC, the Thai Monetary Policy Committee will increase the benchmark policy rate from 0.5% to 0.75% to slow inflation and reduce risks to price stability.

According to Dr. Somprawin, the baht currency will continue to weaken until the third quarter, when it will be between 34.5 and 35.5 baht to the US dollar. After that, it will begin to strengthen, while the current account balance will turn positive.

He added that Thailand’s economy will continue to recover steadily, thanks to the expansion of the tourism sector, in place of exports, though he cautioned that the rate of recovery may slow in the future.

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