Tourism likely to lead Thailand’s economic recovery

by BERNAMA / pic by AFP

BANGKOK – Tourism will likely lead Thailand’s economic recovery moving into 2022 with the reopening of borders.

However, the absence of Chinese tourists and emergence of new variants pose downside risk for the tourism recovery and gross domestic product (GDP) forecast, Maybank Kim Eng said.

Analysts Chua Hak Bin and Lee Ju Ye, in a report, said the absence of Chinese tourists, who account for 28 per cent of total visitor arrivals and tourism receipts in 2019, attributed to China’s zero COVID policy, will cap the strength of the rebound. 

“We forecast GDP growth strengthening to 4.0 per cent in 2022 and 3.5 per cent in 2023, after the dismal 1.6 per cent in 2021.

“We are forecasting nine million visitor arrivals in 2022 and 22 million in 2023, assuming that the Omicron variant is no more lethal than Delta and current vaccines prove effective.

“The pre-pandemic level of 40 million (2019) will only be reached in 2024 or 2025,” they said. 

The analysts said domestic demand will firm as the vaccination rate rises, with a 70 per cent full vaccination projected by January 2022.

The analysts forecast that the Bank of Thailand (BoT) would be the only ASEAN-5 central bank to hold its policy rate in 2022, despite a Fed rate hike, to support the economic recovery.

“We expect BoT to start hiking only in the first half of 2023, when GDP returns to pre-pandemic levels.

“Headline inflation is expected to pick up to 1.8 per cent in 2022 (from 1.1 per cent  in 2021), mainly on the back of high energy prices and the end of government subsidy for utilities,” they said.

The analysts said the pandemic has left deep scars on the labour market and household incomes.

“Unemployment rate jumped to a 16-year high of 2.3 per cent (or 875,000 people) in Q3 2021.

“According to BoT estimates, households lost 1.8 trillion baht (11.2 per cent of GDP) of income because of the pandemic. Number of poor people on state welfare cards is expected to rise to 15 million in 2022 from the current 13.65 million,” they said.