Tourism Revives - Export Slumps
The latest forecast by the International Monetary Fund (IMF) shows that the global economy is poised for slower growth than the previous year, and many large business sectors are at risk of recession. Due to persistent high inflations, the Central Bank cannot ease the monetary policy to help support the economy. The slowing economy is expected to affect Thailand's export sector, especially in the first-half of 2023.
"The figures of export which has been the core engine of the Thai economy in the past two years shows that the export industry began to contract at the end of last year and is likely to continue to slow down due partly to the high benchmark set in the previous years. As the average value of export over the last five years suggests, the Thai export has already reached its peak last year and it is difficult to grow further amid the global economic slowdown. Export is forecasted to contract at least in the first half of 2023 before picking up in the second half when China's economy recovers. Export for the entire year is projected at -1.8% compared to the previous year," said Dr. Pipat.
KKP Research has reprojected Thailand's economic growth this year from 2.8% to 3.6%, boosted by reviving tourism. After China reopened its borders earlier than expected, the number of tourist arrivals in Thailand this year is expected to reach 25 million, up from the previous estimate of 19 million. However, because of the concentration of tourism and short supply chain, it means that only some provinces or economic operators will benefit directly from this recovery.
Overall, economic risks that must be monitored include: 1) when the global economic slowdown will take place, how severe it is, and how it will affect the Thai economy, 2) how soon the global and Thai high inflations will return to normal, and 3) whether or not the reopening of China's borders will be smooth throughout the year. In addition to the COVID-19 pandemic that still needs to be kept under watch, close attention must be paid to the upcoming election, which may add another variable that affects the Thai economy.
Source: Kiatnakin Phatra Financial Group