Currency and Interest Rate Outlook

K KASIKORNTHAI Operating Environment: Economic Outlook for 2021 %YoY 5.0 0.0 -5.0 Key GDP Forecasts and Assumptions 2.4 -10.0 -6.1 2019 2020 2021 F* -0.5 2021 F 2021 F* % YoY (Previous) 2019 2020 Base Range Base Case Case GDP 2.4 -6.1 1.0 0.0-1.2 Private Consumption 4.5 -1.0 0.8 0.5-1.0 -0.5 -0.1 Government Consumption 1.4 0.8 3.0 2.5-3.5 2.5 Total Investment 2.2 -4.8 4.5 3.4-5.8 4.1 - Private investment 2.8 -8.4 3.5 2.5-5.0 3.0 - Public investment 0.2 5.7 8.5 7.2-9.5 7.5 Gov't Budget Deficit (% of GDP) -2.9 -5.1 -5.3 -5.0 to -5.4 -5.3 Exports (Customs Basis) -2.7 -6.0 11.5 8.5-12.5 12.4 Imports (Customs Basis) -4.7 -12.4 21.5 17.0-22.5 23.0 Current Account (USD bn) 38.2 16.5 -7.0 -8.3 to -3.7 -11.0 Headline Inflation 0.7 -0.9 1.2 0.8-1.5 1.2 Policy Interest Rate** 1.25 0.50 0.50 0.50 Key Points: ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■The Thai economy is likely to experience economic recession for two consecutive years ■Prolonged COVID-19 outbreak will have additional impact on the economy through domestic spending and tourism receipts ■Exports and government spending will be the key drivers for Thai economy this year ■Thai GDP may return to its pre-COVID-19 level in 2024 Risk Factors: ■COVID-19 outbreak, new COVID variants and domestic distribution of COVID-19 vaccines ■Thai Baht volatility Trade tensions and geopolitical risks ■Household and business balance sheet deterioration if outbreak lasts longer than expected ■Political instability Notes: MPC's policy rate is at 0.50% (as of August 4, 2021) ▲ represents a higher base case assumption, comparing with the previous forecast, Source: * KResearch (as of August 16, 2021 vs forecast on July 14, 2021) **KBank Capital Markets Research (as of January 19, 2021) represents a lower base case assumption, comparing with the previous forecast บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Operating Environment: Economic Outlook for 2021 ■Global Economy ■Government Stimulus Plan ■Inflation ■Exports and Tourism ■Fed Policy Normalization ■Baht Outlook ■Global economy: The path of global economic recovery is now in peril after the highly infectious and more deadly Delta variant has been detected in many countries worldwide ■US: US economy is expected to rebound strongly, due to the rapid pace of vaccinations and fiscal stimulus programs. However, recovery will hinge on COVID-19 situation since US is currently reporting higher numbers of daily cases ■ Eurozone: Europe's economic recovery is expected to be strong this year. However, the spread of the Delta variant in the region remains a concern ■China: Chinese economy is expected to rebound strongly, as domestic and external demand is picking up. However, new COVID-19 outbreaks and floods may pose downside risks to the economy ASEAN economies: ASEAN economies will likely see uneven economic revival, due to containment of COVID-19, political factors, and economic structure in each country ■Government may roll out additional relief measures to support those who are affected by the lockdown measures ■Government investment projects may be delayed, due to potential shortage of capital goods amid disrupted global supply chain ■Inflation is expected to rise to 1.2% on the back of rising commodity prices amid supply chain disruption in the global and domestic markets ■Thai exports will rebound strongly, with faster-than-expected global economic recovery ■Tourist arrivals are expected to return less than expected due to prolonged COVID-19 outbreak and vaccination rates that may fall short of targets ■Fed would announce the QE tapering program later this year, and keep the Fed Funds rate of 0.00-0.25% in response to more persist inflation pressure and improving job market data ■Baht appreciated to around Bt32.6 per USD late August 2021 after a correction on short position on THB against USD, while the government eases COVID-19 restriction measures amid a slow down on new cases ■However, Baht would hit 32.75 per USD at the end of 2021 as Fed's tapering pressure, impact of COVID-19 to Thai economy and current account deficit Source: KResearch and KBank Capital Markets Research (as of August 18, 2021) Possible Impacts to Thai Economy ■Thai economy is still highly vulnerable to pandemic situation abroad and at home ■Due to increasing risks of the pandemic and slow vaccination progress in Thailand, the number of international tourist arrivals will be lower than expected ■ Supportive fiscal measures may help alleviate consumers' financial burden to some extent, but may not be able to offset the overall impact of COVID-19 on the economy ■Monetary policy is expected to remain accommodative to economic growth throughout 2021 ■Stronger than expected global economic recovery provides an upside to Thai exports ■BOT would maintain its policy rate at 0.50% in 2021 after maintaining a FIDF fee cut at 0.23% until the end of 2022 and pointing credit measures having more effective liquidity to effected groups ■A high fluctuation in USD/THB would make exporters and importers more difficulty for revenue management ■However, global trade remains support Thai exporters' revenue and investment บริการทุกระดับประทับใจ 5 6

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