Virus 'could shave 1%' off growth
published : 18 Feb 2020 at 17:11
writer: Wichit Chantanusornsiri
Thailand is estimated to lose 170 billion baht in tourism income, and one percentage point off the country’s 2020 GDP growth, if the coronavirus outbreak takes six months to contain, says GSB Research.
The number of Chinese tourists is expected to decline by 3.5 million in that scenario, said Government Savings Bank president and chief executive Chatchai Payuhanaveechai.
In a better-case scenario that the virus spread is under control within three months, the number of Chinese tourist arrivals to Thailand will fall by 1.6 million, resulting in a tourism revenue loss of 80 billion baht and wiping 0.4 percentage points off economic growth this year.
GSB Research’s forecast appears more pessimistic than the one by Kasikorn Research Center, which recently predicted that the virus crisis could lower Thailand’s nominal GDP by 0.09-0.13% if the outbreak lasts longer than three months but less than six months.
Don Nakornthab, the Bank of Thailand’s senior director for economics and policy, said last week that the country’s GDP growth would likely be lower than 2% this year, and that first-quarter economic growth could sink below 1%, in the event that the country loses 250 billion baht in tourism income as estimated by the Tourism and Sports Ministry.
The tourism sector, which has been Thailand’s bright spot in recent years, accounted for about 11% of the country’s GDP last year. Chinese tourists are the country’s biggest source of foreign travellers.
Mr Chatchai said retail, hospitality, food/beverage and transport are likely to bear the brunt of economic damage.
The retail sector alone is estimated to lose 25.2 billion baht in income if the virus epidemic ends within three months, but such a loss would more than double to 54.2 billion baht if the outbreak lasted six months.
Modern trade operators, including supermarkets, hypermarkets and those selling beauty products and food supplements, are expected to take a hit.
GSB Research forecasts the hospitality business to see a loss of 20.8-44.7 billion baht in income. Budget and mid-range hotels would be hit hardest, as Chinese travellers are their main customers.
Bangkok, Chon Buri, Phuket, Chiang Mai, Krabi, Surat Thani and Chiang Rai are Thailand’s most popular destinations for Chinese visitors. The research centre counts 5,622 hoteliers in these areas.
The food and beverage sector is predicted to lose 15.8-34 billion baht from the decline in Chinese tourists, with 7,708 operators located in areas popular with Chinese tourists.
Moreover, the virus outbreak will deal a blow to 105,000 street food vendors located in key tourist destinations.
GSB Research estimates that transport business, especially bus and boat tours and public buses, will lose 7.51-16.1 billion baht from the sharp decline in Chinese tourists, with 6,742 operators likely to feel the pinch.
Apart from the direct impact from the drop in Chinese visitor numbers, the deadly virus spread will take an indirect toll on other businesses, which could shave higher-than-estimated GDP off the country’s growth.