Thai tourism outlook downgrade dashes hopes of strong rebound from pandemic

UOB has cut Thailand's gross domestic product (GDP) forecast for 2021, with the downgrade to the latest official tourism outlook having dashed hopes of a strong economic rebound.

The bank's economist Barnabas Gan lowered his full-year growth estimate to 1.5 per cent on Thursday, down from 3.5 per cent previously. His 1.5 per cent estimate is lower than the official forecast, which was cut for a second time to 2.3 per cent on Thursday, against the 4.5 per cent expansion projected late last year.

The Thai government has slashed its annual visitor forecast to two million - less than half the five million predicted in January - and reduced the kingdom's projected tourism revenue to 170 billion baht (S$7.21 billion), from 260 billion baht before.

Said Mr Gan in a report: "While Thailand's trade and manufacturing industries could continue to support overall growth, the negative impact of Covid-19 on tourism, consumer consumption and investment may continue to drag the momentum."

Separately, the Asian Development Bank (ADB) noted in a report that a bounce-back in Thailand's tourism sector requires "good progress in worldwide vaccination".

The ADB, which predicted a "mild recovery" of 3 per cent GDP growth on Wednesday, added: "A delay in the (Thai) government's vaccination plan, the potential for new waves of Covid-19, and the fiscal measures taken to tackle the economic impact of the pandemic having a lower-than-expected effect could weigh on private consumption and investment. Delays in public infrastructure projects could also slow the recovery."

Still, Mr Gan noted that the positive news is the country's improving export environment, with shipments having risen year on year in March: "The economy remains trade-reliant, which suggests that some support to overall growth may be on the cards on the back of a rosier global economic environment."