Thailand: from bad to worse

A jump in new virus cases in Thailand is already showing signs of holding back the recovery and could jeopardise plans to reopen the crucial tourist sector. Despite its initial success in containing COVID-19 – there have so far been fewer than 200 deaths from the disease – Thailand is now experiencing a major outbreak. The country has reported an average of nearly 2,000 daily cases over the past week. To contain the spread, the government has announced the closure of schools, bars and other entertainment venues. These restrictions have led to a sharp drop in our Mobility Tracker and are likely to weigh heavily on consumer spending over the coming months. The outbreak could also cause the government to put on hold plans to reopen the tourism sector. The authorities had been hoping to welcome fully vaccinated foreign tourists to the island of Phuket (which before the crisis attracted 14% of international visitors) without a mandatory quarantine period, starting in July. In our latest quarterly Outlook, we lowered our GDP growth forecast for Thailand for this year to just 3.0%. The worsening outlook reinforces our view that monetary policy will remain supportive for some time to come. Our forecast is that the policy rate will remain unchanged at its record low of 0.5% until the end of 2023.