Thailand’s 2022 consumer spending recovery will be slow: Fitch

Spending is expected to return to pre-pandemic level by 2025.

Thailand’s consumer spending in 2022 will see a slow recovery, following a contraction due to the impact of the pandemic, according to Fitch Solutions.

In a report, Fitch said Thailand’s real household spending will grow by 1.9% year-on-year (YoY) in 2022, an improvement from the around 0.3% YoY growth in 2021.

“However, the recovery in consumer spending will be slow, as the COVID-19 pandemic led to a contraction of 11.7% in real household spending over 2020. As such, despite two years of growth in 2021 and 2022, it has largely come from a low base,” it said.

For 2022, household spending is expected to reach $275b (THB9t), but is still lower than $312b (THB9.7t) the pre-pandemic levels in 2019.

“We forecast that spending will only return to the pre-COVID-19 nominal level by 2025,” it said.

Fitch added that the modest growth forecast in the real consumer spending in Thailand is aligned with its Country Risk team’s forecast that the country’s economic growth of 3.5% YoY. 

It also said that further outbreaks would also “weigh on domestic demand and ultimately private investment.”

Retail sales may stay under more pressure and for longer as recovery in tourism in Thailand would be bearish because of further COVID-19 waves, which could see “greater social unrest as the employment outlook weakens.”