Tourism Rebound in Asia Should Benefit Thai Baht, Morgan Stanley Says

Morgan Stanley (MS) expects Thai Baht (THB) to benefit from a rebound in the tourism sector within Asia ex-Japan (AXJ), citing a balance of payment and economic perspective, as well as Thailand is the only AXJ economy to enjoy positive net travel inflows since reopening its borders.

According to a paper published by Morgan Stanley, Asian economies are joining in the global tourist recovery, with India and Southeast Asian countries in the front.

As the first nation to reopen its borders for international travelers, India has a head start on the industry’s rebound. The number of visitors has risen to 70% of pre-Covid levels. Many ASEAN economies are also seeing a brisk recovery, headed by Singapore and Malaysia, with tourist numbers already returning at 45% of pre-Covid levels. Meanwhile, tourist arrivals in Thailand have surged significantly since May, hitting 34% of pre-Covid levels.

MS predicted that THB and Malaysian Ringgit (MYR) would see the greatest gains within AXJ following the rebound of the tourism industry. Net travel inflows accounted for 8.7% of Thailand’s GDP and 2% of Malaysia’s GDP before the Covid-19 pandemic hit. Within AXJ, tourism was the key contributor to the economies of Thailand, the Philippines, and Malaysia. The Thai economy is the only AXJ economy with positive net travel inflows, but the current inflows are only 6% of that seen pre-Covid, at 0.5% of GDP.

Singapore, China, and Taiwan, on the other hand, saw the highest net outflows from travel pre-Covid, indicating that a recovery in tourism would be a drag on their current account surpluses.