Goldman Sachs: Underperformance To Persist Amid Virus Resurgence

Goldman Sachs note that "recently, the number of new COVID-19 cases has been creeping higher across several Asia-Pacific economies. This is particularly important for Thailand, which is the economy that is most reliant on travel/tourism in the region (12% of GDP in 2019). Even in the more optimistic growth scenarios outlined by the Bank of Thailand, tourism arrival projections (i.e., 1-2mn) are just a fraction of the 40mn visitors seen in 2019. Moreover - in contrast to last year, when the decline in the Thai current account due to lower tourist arrivals was cushioned by a sharp fall in commodity prices and a domestic demand contraction - this year, as commodity prices rebound while tourist arrivals remain at very low levels, we think the current account could slip into a deficit. Reflecting this, we have revised up our USD/THB forecasts to THB31.50, THB31.0 and THB30.50 on a 3-, 6- and 12-month horizon (from THB29.8, THB29.6 and THB29.3, respectively). We maintain our structurally bearish view on the USD and our revised trajectory reflects THB underperformance versus NJA peers, with most pronounced underperformance on a 3-month horizon."