After more than two years in the doldrums, Thailand’s tourism sector is finally showing signs of life. Arrivals in May reached 520,000 – a 77% increase from the previous month and 19% of the level reached in the same month of 2019. Spending by foreign tourists was equivalent to over 10% of GDP before the pandemic began, and a steady recovery in the sector will provide an important boost to the struggling economy – Thailand was the only major country in the region where GDP was still below its pre-pandemic level in the first quarter. A stronger recovery should provide the central bank with the confidence it needs to begin tightening monetary policy. Despite surging inflation, the Bank of Thailand has been one of the few central banks in the region not to hike rates this year as it has prioritised supporting the economy. Our forecast is that the BoT will finally raise interest rates at its August meeting.
Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.
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