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Thailand’s Finance Ministry maintained its forecast for the economy to expand at 3.5% this year, with the scrapping of travel curbs and a weaker baht creating bargains to win tourists back.
The Southeast Asian nation expects to host 8 million foreign tourists this year, Pornchai Thiraveja, director general of the ministry’s fiscal policy office, said in Bangkok on Tuesday. That compares with 6.1 million forecast in April and 40 million who visited the country in the year before the pandemic.
"International tourists are likely to exceed the expectation with easing border restrictions,” Pornchai said. "It is cheaper to visit Thailand.”
The pace of expansion will still be the slowest in Southeast Asia this year, while the Thai currency’s emergence as one of the most-beaten against the dollar also makes it vulnerable to imported inflation. That’s leaving policy makers torn between the need to support economic expansion and control inflation already at a 14-year high.
For now, the Bank of Thailand has ruled out any emergency policy moves ahead of its Aug. 10 meeting, when it’s likely to kick off interest-rate tightening in gradual moves. The central bank sees price gains peaking in the third quarter, a view that finds echo in Bloomberg Economics’ latest global inflation forecasts.
Risks to that outlook loom in the form of volatile oil prices, as well as from the Federal Reserve’s moves that can trigger greater capital outflows from emerging markets. The US central bank is expected to deliver another big interest-rate hike on Wednesday to combat surging inflation.
"We still have to closely monitor the situation in Russia-Ukraine conflict which cause higher energy prices and living costs,” Pornchai said, forecasting the baht to average 34.8 baht per dollar this year.
