EIC: Thailand's exports recovery faster than expected

A view of the port of Bangkok, Thailand. - Reuters

BANGKOK, March 13 (Bernama): Thailand’s exports recovery is likely to continue in 2021 supported by improving global growth on the back of vaccination progress and stimulus packages especially in the United States, according to Economic Intelligence Centre (EIC).

EIC, a research house under Thailand’s Siam Commercial Bank (SCB) said Thai exports recovery is faster than expected, due to improving global growth.

However, sluggish foreign tourism is likely to continue, it said in a note today.

It said several countries’ exports over recent months suggested significant recovery.

"Thai exports also followed the trend with export value in December last year and January this year reaching pre-COVID-19 levels. Looking forward, export recovery is likely to continue, ” it said.

EIC has revised up its 2021 forecast export growth to 6.4 per cent from 4.0 per cent previously.

As for tourism, it expects arrivals for this year to stay at 3.7 million.

It observed that significant recovery in international travelling would take place only when countries reach herd immunity, allowing vaccinated tourists to freely travel.

"Substantial recovery would likely take place in the fourth quarter of 2021 when most Asian countries, which are key tourist groups, reach herd immunity.

"While most developed countries are expected to reach herd immunity over the second and third quarter of 2021, they are not Thailand’s key tourist groups, ” it said.

EIC has also revised Thailand’s 2021 economic growth forecast to 2.6 per cent, from the 2.2 per cent growth it projected earlier, in view of the improving global growth and continuing stimulus packages.

Nevertheless, it said slow domestic demand recovery is likely to continue on sluggish foreign tourism revenue and domestic scarring effects, adversely affecting small and medium enterprises and household income, as well as balance sheets.

"Overall, the recovery for Thai economy is expected to be slow with a risk of sizeable permanent output loss. This trend reflects slow tourism recovery and deep scarring effects, which could impair long-term growth.

"Thailand’s gross domestic product (GDP) is expected to return to its pre-pandemic level by the end of 2022 or early 2023, which is relatively slower than many other countries. This result came from Thailand’s relatively higher dependency on tourism (about 12 per cent of GDP), ” it said.

EIC sees a new wave of COVID-19 outbreak, vaccine progress, rising political instability and geopolitical risks from trade and tech wars between the United States and China as among the key downside risk factors for the Thai economy in 2021. - Bernama