BANGKOK: Thailand is heading for a rare back-to-back current-account deficit as the outlook for tourist arrivals becomes less rosy with a flare-up in Covid cases globally and energy import bills ballooning amid soaring oil prices.
The net-oil importer may post a shortfall of US$4.6bil (RM19.4bil) this year, according to Bank of Ayudhya Pcl, which previously estimated a surplus of US$5.8bil (RM24bil) in the current account – the broadest measure of trade and investment.
Nomura Holdings Inc, DBS Bank Ltd and Maybank Investment Banking Group too expect South-East Asia’s second-largest economy to post a second straight year of deficit, the first time since 1997.
“The odds are now shifting toward a current-account deficit for Thailand this year,” said Krystal Tan, an economist at Australia and New Zealand Banking Group (ANZ).
“The Russia-Ukraine conflict has significant negative implications for Thailand’s current account given its high reliance on imported energy.
“There are also potential second-round effects to watch, such as a fall in Russian tourist arrivals and a potential increase in global freight costs.”
ANZ will revise its Thai current account surplus of US$2.4bil (RM10bil) later this week, Tan said, adding the deficit will be smaller than the shortfall in 2021.
The country posted a deficit of US$10.9bil (RM46bil) last year, the first gap since 2013, as foreign tourism receipts nearly vanished amid the pandemic, official data showed.
The pandemic has robbed Thailand of tens of billions of dollars it used to generate annually from the millions of foreign tourists.
A gradual rebound in tourism with the lifting of most border controls is now at risk from flight disruptions and payment difficulties for Russians, once again leaving the nation’s currency vulnerable to a sell-off.
The baht has lost more than 3% since Russia invaded Ukraine, and the currency’s outlook remains weak with the widening current-account gap and interest rate differential between the US and Thailand, said Pipat Luengnaruemitchai, chief economist at Bangkok-based Kiatnakin Phatra Securities.
Thailand’s status as a net oil importer is fueling a trade deficit and inflation, muddling the outlook for an economic recovery, said Somprawin Manprasert, chief economist at Bank of Ayudhya.
The lender, a unit of Mitsubishi Financial Group Inc, has cut Thai growth forecast this year to 2.8% as it sees a hit from low tourist arrivals and supply disruptions from the war, he said.
“It will be a double-whammy for Thailand as it faces rising inflation and a slowdown in the economy,” Somprawin said.
“Tourism will be affected as it’s not only Russians who will not travel, as the sour sentiment and falling income will discourage others too. Thai economic outlook is worrisome.” — Bloomberg