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9 Nov 2021

Thai Economy

Concerns over high cost of living caused October’s KR-ECI to decline Ongoing surge in oil prices and flood damage have caused prices of goods to rise in the short term


•    In October 2021, Thai households harbored increased concerns towards the economy and their living conditions, due to continuously rising energy prices and impact of recent floods, which have driven up vegetable prices. KR-ECI in October 2021 and the 3-month Expected KR-ECI dropped to 34.9 and 36.7, from 36.6 and 38.4, respectively, in September 2021. Although the number of daily COVID-19 cases has begun to stabilize, and the COVID-19 situation has improved considerably as a result of accelerated vaccination which prompted the gradual easing of restrictions on economic activity, prices of goods have risen and thereby affected household spending.
•    KResearch conducted an additional survey on how Thai households coped with higher energy prices. The findings revealed that 41.0 percent of participants plan to reduce non-essential expenses such as travel around the New Year holidays. Meanwhile, 39.4 percent of those surveyed reckoned that they will reduce the volume of using consumer goods to ensure longer use. These methods of coping with increased expenditures thus affects household consumption, one of the supporting factors for Thailand’s economic recovery.
•    In the forthcoming period, Thailand’s reopening (starting November 1, 2021) and the easing of other COVID-19 prevention and control measures should help to boost economic activity. Meanwhile, the impact of floods on vegetable prices will tend to ease somewhat after flood levels decrease and Thailand transitions into the cool season. However, due to high global energy prices, more time may be needed to strike a balance between the rising demand for oil and production volume. As a result, energy prices may continue to push up transportation costs, which will in turn affect the costs of other goods and services. Since households’ economic condition will likely remain fragile amid the energy crisis, the government’s stimulus packages in terms of boosting consumption will continue to be crucial as Thailand moves forward with its reopening plan, aided by clear measures to mitigate risks.

Thai Economy