Thai economy recovering on tourism despite global slowdown – central bank

BANGKOK (Reuters) – Thailand’s economic recovery maintained its traction in December, boosted by increased tourism and domestic consumption, but exports were affected by the slowing economies of trading partners, the central bank on Tuesday.

Economic activity was likely to improve steadily as the vital tourism sector gained momentum, the Bank of Thailand said in a statement, adding it would monitor the global economy, costs and China’s reopening.

Tourism has performed better than earlier expected as China reopened sooner than thought, Assistant BOT Governor Chayawadee Chai-Anant told a news conference.

Last week, the BOT raised its projections for foreign tourist arrivals to 25.5 million this year and 34 million next year, up from 22 million and 31.5 million, respectively. There were nearly 40 million visitors in pre-pandemic 2019.

With China’s reopening, the government is predicting at least five million Chinese visitors this year.

In 2022, Thailand beat its tourism target with 11.15 million foreign visitors, a surge from less than half a million in the previous year.

The tourism rebound has helped lift the baht, which has risen about 5.4% against the dollar so far this year, becoming Asia’s best performing currency.

The baht strength has also been helped by better economic fundamentals and its impact on exports was small, while capital flows remained normal, Chayawadee said.

The BOT would only take action on the currency if it was too volatile, to help prevent an excessive impact on the economy, she added.

In December, exports, also a key driver of growth, dropped 12.9% year-on-year in December, with imports down 10.5% and a trade surplus at $1.0 billion.

Thailand recorded a current account surplus of $1.1 billion in December after a deficit of $0.4 billion the previous month.

In the final quarter of 2022, Southeast Asia’s second-largest economy continued to improve from the previous three months on tourism but exports slowed, the BOT said.

(Reporting by Orathai Sriring, Kitiphong Thaichareon and Satawasin Staporncharnchai; Editing by Ed Davies, Martin Petty)