Ms. Natthaporn Treeratsirikul, Deputy Managing Director of Kasikorn Research Center Co., Ltd. believes that by the end of 2022 and into early next year, the U.S. economy is likely to enter a technical recession again, similar to the European economy, which is expected to experience a quarter-on-quarter contraction for two consecutive quarters. This reduces expectations for Thailand's recovery to rely on export growth. Additionally, global inflation is not expected to decrease quickly due to ongoing international political issues. Therefore, the Thai economy for the remainder of 2022 and into 2023 will primarily depend on the recovery of tourism. The number of tourists this year is projected at 9.75 million, up from the previous estimate of 7.2 million, while in 2023, the number of tourists is expected to rise to between 13.0 and 20.0 million, which is still significantly lower than the pre-COVID level of 40 million. Overall, Kasikorn Research Center maintains its GDP forecast for 2022 at 2.9%, while in 2023, GDP is expected to accelerate to a range of 3.2-4.2%. However, there are still several risk factors to monitor, including inflation, interest rate hikes, and the economic slowdown of several trading partners.

Regarding interest rate trends, it is expected that the Fed will continue to raise interest rates in the remaining two meetings of this year and possibly into early next year, depending on the strength of inflation and the size of each rate hike by the Fed. Meanwhile, Thailand's policy interest rate is expected to continue rising at least until the first quarter of 2023, but at a gradual pace. The Thai baht is expected to remain weak for the rest of 2022 as long as the U.S. dollar is supported by the Fed's interest rate hikes.

Ms. Thanyalak Watcharachaisurapol, Deputy Managing Director of Kasikorn Research Center Co., Ltd. believes that the signals for the Bank of Thailand's policy interest rate hikes, combined with the policy to adjust the contribution rate to the rehabilitation fund back to 0.46% starting in early 2023, will lead commercial banks to gradually raise fixed deposit and standard loan interest rates. Although liquidity remains high, it is believed that the higher interest rates will not lead to a rapid surge in non-performing loans (NPL Cliff) as commercial banks are proactively restructuring and managing debts. However, the issue of debt quality and customer support must still be closely monitored. Kasikorn Research Center forecasts that the ratio of non-performing loans to total loans in the commercial banking system will be in the range of 2.90-3.10% by the end of next year, compared to 2.88% at the end of Q2 2022. The trend of loans in the Thai commercial banking system is expected to grow in the range of 4.5-6.0% in 2023, compared to an estimated 5.0% this year, which is not very high amid ongoing economic uncertainties.

For most industrial sectors for the remainder of this year and 2023, Ms. Kewalin Wangpichayasook, Deputy Managing Director sees that they will still face many challenges, especially from the slowdown of major economies that are Thailand's main trading partners, which means that export-dependent industries may not fully benefit from the weaker baht. The tourism sector is similarly affected, as major tourist markets are facing currency depreciation and some countries are at risk of recession. Additionally, high energy prices are driving up airfare and other expenses, all of which impact travel and spending decisions. A 10-15% depreciation of the baht is expected to affect the average cost of imports in the industrial sector by about 2.2%. Therefore, this poses a challenge that the industrial sector must prepare for, and the path to recovery next year is not expected to be smooth.