"Krungsri Research" <\/span><\/strong><\/span>reports that <\/strong>GDP in the third quarter contracted less than expected at -0.3% YoY, suggesting that economic activities may recover to pre-pandemic levels sooner than anticipated.<\/span><\/strong><\/span> According to the National Economic and Social Development Council (NESDC), the GDP for Q3/64 contracted by -0.3% compared to the same period last year, down from a growth of 7.6% in the previous quarter, impacted by the severe outbreak of <\/span>COVID-19. However, this negative rate was less than the market and Krungsri Research's expectations of -1.3% and -1.1%, respectively, due to support from increased government spending, measures to stimulate consumer purchasing power, and growth in non-durable goods consumption, particularly in food, despite an overall contraction in private consumption. Additionally, the increase in inventories this quarter played a significant role in supporting the economy, along with continuous growth in exports of goods and services, especially in service exports driven by improved shipping service fees in line with international trade volumes.<\/span><\/span><\/p>

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            However, public investment saw a significant contraction due to a decline in construction. In the manufacturing sector, the severe outbreak impacted production in certain industries, including manufacturing (-1.4%) and construction <\/span>
(-4.1%). <\/span>

            Meanwhile, the services sector, particularly accommodation and restaurants, continued to contract at a high rate (-18.7%). However, the agriculture sector (+4.3%) and certain service sectors, such as information and communication (+6.8%) and finance and insurance (+3.5%), showed good growth.<\/span><\/span>

            In the first nine months of 2021, the Thai economy grew by 1.3%. Recently, the NESDC revised its GDP growth forecast for this year to 1.2% (up from the previous estimate of 0.7%-1.2%) and expects growth of 3.5%-4.5% in 2022.<\/strong><\/span><\/span>

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"Krungsri Research" is preparing to revise its economic forecasts for Thailand in 2021 and 2022, supported by the fact that the GDP in Q3 contracted less than expected, accelerated vaccine distribution, and the government's target of administering 100 million vaccine doses by the end of November (originally set for the end of this year). This will help support the recovery of domestic economic activities and the reopening to foreign tourists, along with positive signals from private sector investment that may benefit from the recovery of both the domestic economy and global economic activities gradually improving. Furthermore, government measures to support economic recovery are expected to remain significant, along with ongoing accommodative monetary policy. Overall, Thai economic activities (Thai GDP level) are likely to recover above pre-pandemic levels sooner than previously expected, by 1-2 quarters (originally anticipated in Q1/2023).<\/span>

          Regarding the Bank of Thailand (BOT), it indicates that the increase in inflation is due to temporary factors and signals that it will not rush to raise interest rates next year.<\/span> The Monetary Policy Committee (MPC) meeting on November 10 unanimously decided to maintain the policy interest rate at 0.50%, assessing that the Thai economy has passed its lowest point and is entering a recovery phase, supported by gradually improving domestic consumption as restrictions ease, accelerated vaccine distribution, and a labor market showing signs of improvement. Therefore, it is expected that GDP for 2021 and 2022 will grow close to previous estimates, while general inflation is expected to rise temporarily mainly due to global energy prices.<\/p>

"Krungsri Research" estimates that although the risks to Thailand's economic growth have decreased, inflation risks have increased, and many countries are preparing to gradually reduce monetary policy easing. However, in Thailand, no interest rate hikes are expected next year because <\/span>

- General inflation may rise in the short term, potentially reaching 3% in some months of Q1/2022, partly due to the low base effect from early 2021, but it will ease in the remaining months of 2022, consistent with the BOT's view that global oil markets will face excess supply starting in Q2/2022.<\/span>

- The economic recovery remains fragile amid uncertainties, especially regarding the recovery of Thailand's tourism sector, which will take time to return to pre-pandemic levels.<\/span>

- From the MPC's statement, which continues to emphasize supporting economic recovery, it indicates that authorities will maintain an accommodative monetary policy. Overall, Krungsri Research expects the MPC to keep the policy interest rate at the historic low of 0.50% at least until the end of 2022.<\/span>

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