SCB forecasts CLMV economy to accelerate, opportunities for Thailand
Mr. Pan Patanasiri, Analyst, Economic Intelligence Center (EIC), Siam Commercial Bank Public Company Limited and Dr. Chinnawut Techanuwat, Director of Economic Research Department and financial markets, Economic Intelligence Center (EIC) Siam Commercial Bank Public Company Limited joins the analysis of the CLMV economic outlook that in 2021, the CLMV economy will recover only limitedly, despite the benefit of recovering exports in line with the global economy. The pressure factor was the delta outbreak in Q2 and Q3, which was the worst outbreak and led to tighter lockdown measures. Meanwhile, the Myanmar coup in February 2021 This has caused the Myanmar economy to contract severely and exacerbate the impact caused by the COVID-19 outbreak.
However, the CLMV economy has begun to show signs of recovery in the fourth quarter due to a decline in the number of infections. (to hundreds per day in all countries except Vietnam), partly due to higher vaccination rates. (Cambodia has injected a full dose of 81.8% of the population, Lao PDR 58.7%, Myanmar 38.4% and Vietnam 78.5% as of March 2, 2022) and the easing of lockdown measures following the policy change to life. together safely with COVID-19, while the export sector has regained high growth following the disruption of the supply chain has eased. In addition, some countries such as Cambodia and Vietnam has started measures to accept tourists without quarantine or reduced detention time If full vaccination doses are received, the EIC views COVID-19 control measures in the CLMV economy to be more relaxed in 2022 than last year. This will be a positive factor for domestic demand. Meanwhile, external demand will be supported by continued global economic growth and the opening of borders to tourists.
The risks to the CLMV economy to watch out for in 2022 are: 1) high uncertainty regarding outbreaks of omikron or other strains; 2) relatively low vaccination rates in the country. Lao PDR and Myanmar 3) The global economy may recover more slowly than expected. amid rising geopolitical risks especially the Chinese economy which has a strong connection with the CLMV economy. 4) The rising energy prices from the Russo-Ukraine war factors. This will cause inflation to accelerate and affect consumer purchasing power. especially when the currency of the CLMV economy is depreciating; and 5) Fiscal and monetary stability in each country. Especially in Lao PDR and Myanmar, which have high public debt burden compared to government revenue collection. Amid global financial conditions that will tighten this year, country-specific factors will still be important to the economic outlook, such as the prolonged political uncertainty in Myanmar. This would result in a very limited possibility of recovery in almost all sectors of the economy.
The CLMV economic recovery will be a positive factor for the Thai economy. through higher exports and is an opportunity for Thai businesses to invest in neighboring countries Thai exports to CLMV are expected to continue to expand at a slower rate. New factors to watch out for are the opportunity to export agricultural products to China via the China-Laos high-speed railway. which is expected to reduce the cost and delivery time is high and opening more border trade The Ministry of Commerce expects to open 12 additional checkpoints this year. However, there is still a risk of postponing the opening of the border trade if the number of COVID-19 infections accelerates once more. Thai direct investment to CLMV tends to recover gradually. According to the economic recovery in the region and measures to open travelers without quarantine. Vietnam is expected to continue to be the country with the highest proportion of Thai investment. Meanwhile, investment in Myanmar will stagnate due to political uncertainty in the country. Tourists from CLMV countries are expected to gradually enter Thailand in the second half of the year. When the Omicron species outbreak situation began to unravel If Thailand can make an agreement to match international travel (Travel Bubbles) with countries in the CLMV group, it will be another positive factor for the Thai tourism sector this year, especially those traveling through border checkpoints.
However, the high cost of COVID-19 testing and travel insurance will be a factor depressing the recovery of the CLMV tourist market. The situation of migrant workers from CLMV this year is likely to increase in line with employment opportunities. in Thailand higher The quarantine measures are expected to be eased. and policies for organizing foreign workers into the legal employment system Employment of workers from Cambodia, Lao PDR and Myanmar in Thailand has been stagnant since June 2021 at regarding 2.16 million people, lower than the pre-COVID-19 crisis level of regarding 2.7 million people. Aliens continue to prolong may lead to higher wages and affect the performance of Thai businesses during the period of economic recovery.