Amid sliding exports and the sluggish world economy, tourism is playing a key role in shoring up Thailand’s economy.
The tourism industry has generated 1.1 trillion baht revenue for the country in the first seven months of the year, 638.2 billion baht coming from spending by foreign tourists, deputy government spokesperson Traisuree Traisaranakul said recently.
The number of foreign tourists arriving from January to July 30 reached over 15.32 million, a 384 per cent improvement compared to the same period last year, according to the Tourism and Sport Ministry.
The ministry has predicted that at least 25 million tourists would visit Thailand this year, a big recovery over the previous two years, but well below the pre-COVID-19 figure of 39 million.
The top five countries from where the tourists came were: Malaysia (2,439,710), China (1,839,660), South Korea (907,463), India (885,772) and Russia (854,946).
Traisuree said the recovery in tourism was a result of the easing of the pandemic and government policies to woo foreign tourists.
Chinese tourists below expectations
The Fiscal Policy Office downgraded its forecast for arrivals from China to 5.6 million from 7 million in April. Lowering the estimated number of Chinese tourists also prompted the FPO to downgrade its economic forecast to 3.5 per cent from the 3.6 per cent previously estimated, said Pisit Puapan, executive director of FPO’s macroeconomic policy division.
The FPO had also downgraded its forecast of income from foreign tourists to 1.25 trillion baht from 1.3 trillion baht.
However, the FPO has maintained its estimate for the total number of tourists in the year at 29.5 million. An increase in arrivals from Malaysia is expected to compensate for the reduced number of Chinese tourists, although that still leaves a revenue shortfall of 50 billion baht, as Chinese tourists usually spend more per head, he added.
The slower economic recovery in China has been blamed for the lower number of Chinese tourists. The Chinese government has started to boost domestic demand which may benefit Thailand’s tourism industry and exports later this year.
Kirida Bhaopichitr, director at Economic Intelligence Service of Thailand Development Research Institute (TDRI), said currently Chinese people are focusing on travelling within their country rather than overseas. The high air fare was also a discouraging factor, she said. For example, air fare on the Kunming-Bangkok route had increased 2-3 times compared to the pre-pandemic period, she said.
With the Chinese government launching a new round of economic stimulus measures, Thailand’s tourism and exports of consumption products to China may receive some benefits, Kirida added.
Visa issues
Sisdivachr Cheewarattanaporn, president of the Association of Thai Travel Agents (ATT), voiced his concern over visa application rules for the online or electronic visa system. Chinese tour operators are complaining that the e-visa application procedure had become complicated as the Thai authorities took more time to approve visas for Chinese tourists, he said.
Before the pandemic, the visa approval took only 1-3 days, but now approval takes about 10 days to one month, and some applications are rejected, he said. Therefore, organizing a Chinese tour group is not as easy as before, he pointed out. He urged the government to make the visa application process easier.
Meanwhile, hotel operators were still complaining about the high cost of electricity. The caretaker government has left it to the next administration to deal with the issue.
Businesses also face rising borrowing costs as the central bank has continued to increase the policy rate — seven times since August last year — to 2.25 per cent. After the latest rate hike on August 2, the Monetary Policy Committee of the central bank indicated that there could be more small hikes as it said the rate hikes had come close to a terminal rate, a situation economists consider as stable and full employment is achieved
Tourism boosting consumption
Spending by both foreign and Thai tourists has boosted domestic consumption, said Pisit. The FPO has forecast private consumption to expand by 4.5 per cent this year. The easing of inflation has also encouraged consumer spending. The FPO has predicted the consumer price index would fall by 1.7 per cent this year while the Commerce Ministry forecast a 1.5 per cent decline.
However, the Bank of Thailand remains cautious about rising cost of living impacting vulnerable groups whose debt far exceeds their income.
Outlook for export
Many economists hope that exports will expand in the second half of the year after contracting 5.4 per cent in the first half. But recovery depended largely on the world economy, which is still highly volatile. The International Monetary Fund last month upgraded its growth forecast for the global economy to 3 per cent from 2.8 per cent estimated in April, but it noted that the tourism and service sector had grown faster than manufacturing, which meant it was not conducive for the export of goods.
“Those countries [that] are tourist destinations have done relatively well. Those countries [that] are more manufacturing hubs have done maybe a little bit less strongly,” the IMF’s chief economist, Pierre-Olivier Gourinchas, told the BBC.
The FPO has forecast Thailand’s exports to turn positive in the fourth quarter with a contraction of 0.8 per cent for the full year.
By Thai PBS World’s Business Desk
