Fitch Ratings expects Thailand to lead gains among Asia-Pacific economies (Apac) from China’s reopening following the easing of its stringent zero-Covid policy, as China was a major source market for the second largest economy in Southeast Asia prior to the pandemic.
“The effects on Thailand may be particularly important, as several of its credit metrics, including fiscal ones, have deteriorated as a result of weak tourism activity and stepped-up fiscal efforts since 2019,” said the credit rating agency in a report on Tuesday, suggesting that Thailand is one of the Apac economies to watch as Chinese tourists return.
Fitch analysts predicted that China’s action will improve the domestic employment market and the external services trade balance, which in turn might have a beneficial impact on the country’s government credit.
Malaysia, Hong Kong, and Macao are some of the other economies that stand to gain from China. Moreover, Fitch argued that macroeconomic performance in Singapore, Vietnam, and Sri Lanka might be bolstered by increased demand from Chinese tourists.
However, the agency did warn that threats still exist to Asia and the Pacific’s tourist recovery.
Further, Fitch believes that the aviation and tourist industries in Apac would slowly improve. It pointed to labor shortages, air travel capacity limits, and high global energy costs as possible causes of skyrocketing ticket prices and a subsequent decrease in tourist interest.