Thailand's third wave of Covid-19 dampens tourism, recovery hopes: analysts

BANKS are downgrading their forecasts for Thailand as the kingdom battles its third and most severe wave of Covid-19.

On Wednesday, the Thai government reported 1,458 new daily cases. While this is down from Sunday's record of 1,767 infections, the measures taken to try and contain the spread are expected to deal a blow to the economy.

In a note by Citi economist Nalin Chutchotitham on Tuesday, the bank lowered its GDP forecast for 2021 to 2.4 per cent, from 2.9 per cent previously. The downgrade prices in weaker private consumption and lower expected tourist arrivals due to the third wave, with containment expected to take two to three months.

She noted that last year's stimulus package of one trillion baht (S$42.43 billion) has almost been used up. The bank does not expect additional stimulus, if any, to be larger due to the government's concerns about running up fiscal deficits too swiftly.

Furthermore, Citi expects Thailand's central bank to maintain its 0.50 per cent policy rate, while focusing on more targeted measures for firms and households to have quicker access to liquidity and debt restructuring.

In a note on Monday, Maybank analyst Maria Lapiz said that even if Covid-19 cases in the country ease, the impact of the third wave could be negative in many sectors, especially consumer-driven ones like mass retailing, media, food and beverage, and tourism.

"Recall that currently we are already expecting a potential downside on 1Q21 earnings due to the effect of the 2nd wave infection," wrote Ms Lapiz. "Now, the downside risk bias is likely to continue to 2Q21, shaving percentage points off the recovery that is mainly due to a low 2Q20 base due to nearly two months of full lockdown."

She added: "The main difference between 2Q21 vs 2Q20 is the absence of financial support." It is currently not clear what the next phase of stimulus programmes will comprise, if any.

Thailand's Covid-19 third wave began around April 1, after infections were traced to nightlife venues in the capital Bangkok. In the nearly three weeks since, the country's total cases to-date have spiked by more than one-third, from about 28,900 to over 46,600 as of Wednesday.

At the onset of the resurgence, Thai authorities had just rolled out plans to reopen the country to tourism, unveiling shorter quarantines of 10 days for eligible travellers, or seven days for vaccinated ones to specified destinations. They had also announced plans to waive quarantine requirements for vaccinated travellers to Phuket from July.