Thailand
Thailand 2022 GDP to rise 3.5%, growth impeded by tourism sector: DBS
DBS Group Research on Friday (Mar 4) expects Thailand’s gross domestic product (GDP) to grow 3.5 per cent in 2022 and 4.2 per cent in 2023, up from the 1.6 per cent increase of 2021.
In its monthly strategy note on Thailand, DBS added that growth should be driven by all economic engines except for the tourism sector, which will take years to fully recover from the impact of the Covid-19 pandemic.
Rising Covid-19 cases in the Asean country pose a key risk to DBS’s view, but with the low fatality rate, the brokerage believes the impact to sentiment should be lower this year should there be no further lockdowns.
As for Thailand’s corporate earnings, DBS took on a conservative stance despite total 2021 corporate earnings jumping 130 per cent, with a likelihood of rising again in 2022.
Its projection of corporate earnings increasing by 5 per cent this year and 8 per cent in 2023 is based on growth from the domestic consumption sectors, including food, commerce and construction, that had suffered badly during the peak of the Covid-19 pandemic.
DBS also believes the current Brent oil prices that have shot over US$100 per barrel could be an upside to this view, as the energy and petrochemical sector makes up slightly above one-third of the overall Thailand market earnings in 2022.
However, while crude oil prices have benefited from the Russia-Ukraine conflict, the same conflict is a second key risk to DBS’s view as it could indirectly impact Thailand’s GDP growth despite neither country being a major trading partner of the Asean country.
“A prolonged crisis could potentially result in disruption to global trade, fuel inflation, and slower global economic recovery,” said DBS, adding that it has already caused global market volatility and flights to safer assets like gold and the US dollar.
Thailand’s tourism could also face further headwinds from the crisis, as Russia had been the third highest contributor to the sector’s revenue in 2019 before Covid-19, accounting for 4 per cent of total tourist arrivals to Thailand and 5 per cent of tourism receipts that year.
Meanwhile, it has maintained its end-2022 SET Index target at 1,850, based on 19 times the forward price-to-earnings ratio that is 0.5 standard deviation above the historical average.
The SET Index refers to the Stock Exchange of Thailand Index, a composite stock market index that covers all common stocks and units of real estate investment trusts on the mainboard of the Thai stock exchange.
On its preferred stock types, DBS said: “We now prefer banks for value, upstream energy producers (due to) rising oil prices, consumer (with) the resumption of businesses post-reopening, and property (for) attractive valuation plus high yield.”
Source: https://www.businesstimes.com.sg/asean-business/thailand-2022-gdp-to-rise-35-growth-impeded-by-tourism-sector-dbs