Moody’s Investors Service says in a new report that a resurgence in coronavirus cases along with low vaccination rates in Asia Pacific (APAC) pose renewed risks to domestic demand, although recovering global trade will support the region’s more export-oriented economies.
Despite Thailand’s (Baa1 stable) export-focused manufacturing sector, with goods exports worth 45% of GDP, reliance on international tourism receipts is relatively high, at about 20% of total exports as of 2019, says Moody’s in the report “Sovereigns – Asia Pacific: Lagging vaccinations pose risks to domestic demand; exports provide buffer for some”
The direct contribution of travel and tourism to Thailand’s economy was around 10% of GDP before the pandemic, but the economic repercussions of a significant slowdown are more widespread given a large informal tourism sector.
This exposure will drag on growth even as the country partially reopens to tourism, with the authorities planning to waive quarantine requirements for vaccinated visitors, starting with the tourist hotspot of Phuket Island from July.
The government aims to accelerate inoculations ahead of that; so far, around 8% of the population has received a first dose of the coronavirus vaccine.
Moody’s expect Thailand’s real GDP to expand 2.8% in 2021, marking a relatively shallow rebound from a 6.1%…
