(Reuters) – JP Morgan analysts downgraded Thailand’s stock rating on Monday, citing a slow recovery in the tourism industry due to rising inflation and a rise in COVID cases -19 in China.
JPM said the tourism industry in Southeast Asia’s second-largest economy is facing several headwinds, including soaring global inflation as well as weakening consumer sentiment and exchange rate fluctuations, as the brokerage lowers its rating from “overweight” to “neutral”.
Thailand, one of the world’s most popular tourist destinations before the pandemic, was among the first nations in Asia to reopen its borders to vaccinated visitors last year with limited quarantine standards, hailed at the time. as a model for reopening.
Travel and tourism in Southeast Asia – known for its white sand beaches, historic architecture and warm climate – contributed $380.6 billion to the region’s GDP in 2019, or 11.8% of the total, according to the World Travel and Tourism Council.
Thailand’s tourism industry contributed 12% of the country’s GDP before the pandemic.
More than a quarter of the 40 million tourists who visited Thailand in 2019 were Chinese. This year, the country expects between 5 and 10 million international arrivals from places like Malaysia and other neighbors in Southeast Asia.
“China’s firm zero Covid policy and recent capital outflows are likely to delay the return of Chinese tourists abroad,” JPM said.
Forward bookings for 2022 show Thailand expected to reach 25% of pre-pandemic levels, behind levels of 72% and 65% for Singapore and the Philippines, respectively.
Thailand’s economic activity improved in April after the easing of COVID-related restrictions, but remained under pressure from the rising cost of living after a slowdown in the previous month, its central bank said on Friday. . JPM also downgraded the Thai industrial sector from “neutral” to “overweight”.
(Reporting by Aniruddha Ghosh in Bangalore)