Thailand’s economy is set to bounce back from a shock contraction in the fourth quarter as foreign tourist arrivals are likely to surprise on the upside and counter headwinds to merchandise exports from a global slowdown.
(Bloomberg) — Thailand’s economy is set to bounce back from a shock contraction in the fourth quarter as foreign tourist arrivals are likely to surprise on the upside and counter headwinds to merchandise exports from a global slowdown.
Southeast Asia’s second-largest economy will expand 4% this year even after the “sharp and surprise sequential contraction” in the fourth quarter, according to Nomura Holdings Inc. While Standard Chartered Bank Plc sees a gross domestic product expansion of 4.5% this year, DBS Bank Ltd. forecasts a growth rate of 3.4%, up from 2.6% last year.
While a 1.5% contraction in fourth quarter from the preceding three months surprised most analysts, China’s scrapping of Zero-Covid policy has already triggered a rush of tourists from Thailand’s biggest source of visitors before the pandemic. That may in turn perk up domestic consumption, providing a spark for economic expansion, especially in the second half.
“We see significant upside from returning Chinese tourists over the next two years,” Chua Han Teng, an economist at DBS, wrote in a note. “It will be driven by some revenge traveling, improvements in flight capacity, and efforts by Thai authorities to spur tourism activity.”
Here’s a wrap up of economists’ views on Thai GDP:
Siam Commercial Bank (Somprawin Manprasert)
- “The trend of tourism-led recovery this year hasn’t changed. We see a turnaround in the economic situation during the last couple of weeks from rising tourist arrivals and a not-so-bad global economy and these will likely set the tone for good growth this year.”
- “We just revised up our tourist arrivals this year to 30 million and we still see an upside to our forecast.”
Nomura Holdings (Euben Paracuelles, Charnon Boonnuch)
- “We maintain our 2023 GDP growth forecasts of 4%, well above the NESDC’s new mid-point forecast of 3.2% and picking up more materially from 2022. This reflects our more positive view on the tourism revival, in which we expect 30 million foreign tourist arrivals, above the 28 million expected by the NESDC.”
- “However, as we have stated, we think the tourism boost will materialize in second half after the supply-side constraints (i.e., manpower shortage and flight capacity) ease materially in second quarter. Our forecast pencils in a sequential GDP growth rebound in the first quarter, avoiding a technical recession.”
Kiatnakin Phatra Securities (Pipat Luengnaruemitchai)
- “Despite the negative surprise on GDP growth, we do not think it would be a cause for the Bank of Thailand to pause. The positive outlook on tourism recovery, particularly after China’s reopening, should support the recovery, despite the headwinds from exports contraction.”
- “More importantly, Thailand’s policy rate remains well below the inflation rate. As the BOT becomes increasingly concerned about the risk of demand-pull inflation, it would need to continue its gradual and measured normalization plan.”
Maybank Investment Banking Group (Ju Ye Lee)
- “I’m maintaining my 2023 GDP growth forecast at 4% despite the weak fourth quarter print, as China’s reopening will not only boost tourism (tourism receipts from China visitors amounted to 3.1% of GDP in 2019) but also help support goods exports, which was the key dampener to fourth-quarter growth.”
Pantheon Macroeconomics Ltd. (Miguel Chanco)
- “The Thai economy’s finish to 2022 was a disaster across the board, and should put a quick end to the BOT’s tightening cycle.”
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