Thailand’s equities have been downgraded by JP Morgan after analysts considered that rising inflation and surging Covid-19 infections in China were slowing down the Thai tourism industry’s recovery, the global leader in financial services announced Monday.
The country has the second-largest economy in the Southeast Asian region and is one of the most popular tourist destinations worldwide. However, despite being among the first nations to reopen its borders to vaccinated international visitors with limited quarantine programs and schemes, the pandemic’s effects on the Thai economy’s resurge are still latent.
According to JP Morgan, the kingdom’s tourism industry has been affected by various factors but mainly by global inflation, weakening consumer confidence and currency fluctuations.
Thailand has stood out as a world-class travel destination thanks to its natural attractions, pleasant climate, rich culture and historic architecture. Data from the World Travel and Tourism Council showed that the industry contributed 11.8% of the region’s GDP, meaning 380.6 billion dollars, in 2019.
That year, Thailand received 40 million foreign tourists, mostly from China. Also, before the pandemic, travel and tourism accounted for 12% of Thailand’s GDP.
However, forward bookings show that 2022 levels will only reach 25% of those before the Covid-19 pandemic. The nation’s figures are behind levels in Singapore (72%) and the Philippines (65%).
JP Morgan said China’s “firm zero-Covid policy” and recent capital outflows would delay Chinese tourists’ return to Thailand. In addition, only 5-10 million international visitors are expected from other destinations in Southeast Asia, such as Malaysia.
The Thai government relaxed some Covid-19 restrictions in April, allowing economic activity to improve considerably. However, the sector’s full recovery has been decimated by the rising cost of living after a slowdown in the previous period, the Bank of Thailand explained on Friday.
Meanwhile, brokerage JP Morgan downgraded the kingdom’s industrial sector to “neutral” after rating it “overweight” in previous years.
