Bank of Thailand warns of tourism meltdown
Next year may see greater impact
Thailand's tourism industry will face greater risks next year if the government continues to restrict foreign travellers from entering the country, says the Bank of Thailand.
Foreign arrivals could be downgraded from a projection of 8 million this year and 16 million next year given the deflated tourism outlook, said Don Nakornthab, senior director of the economic and policy department.
The Tourism and Sports Ministry and the National Economic and Social Development Council already cut their projections for this year's foreign tourist arrivals to 6.7 million and next year's to 12 million.
The difference of 1.3 million foreign arrivals this year in projections from the central bank and the two state organisations would result in a 0.5% decline in Thailand's GDP, said Mr Don.
The loss cannot be computed directly into full-year GDP calculations because there are other economic factors to be considered, he said.
Thailand received no foreign tourist arrivals for the fourth consecutive month in July as international travel restrictions remain in place to safeguard against a second outbreak.
Foreign arrivals to Thailand reached 40 million in 2019, with revenue generated from the tourism industry contributing almost 20% of GDP.
With inbound flight restrictions still in place, the ratio of foreign travellers is expected to shrink by 100% year-on-year between April and December, said Mr Don.
He said the government should consider looking into proper measures to allow foreign travellers to return to stir tourism and economic growth momentum.
"If foreign travellers still cannot visit the country, this will impact Thailand's economic growth more severely next year. The government should strike a balance between tourism measures and outbreak containment," said Mr Don.
The central bank also factored in the possibility of a second wave outbreak as other Asian countries have suffered this predicament. New infections of around 20-30 cases per day are acceptable, he said.
The economy continued to improve in July, driven by public spending and the relaxation of lockdown measures both in Thailand and abroad.
Public spending, excluding transfers, continued to expand from the same period last year, attributed by marked expansion in capital expenditures both from the central government and state-owned enterprises.
Private consumption indicators, merchandise export value and manufacturing production exhibited lighter contractions.
In July, exports contracted by 11.9% year-on-year, lower than a 24.6% contraction in June. Excluding gold exports, Thai shipments fell by 14.3% year-on-year.
Private investment indicators in July contracted 12.8%, higher than 10.2% in the previous month. This reflects fragile confidence among business operators as high economic uncertainty prevails.
The labour market improved somewhat, reflected by a decline in the number of workers registered for a temporary suspension of business, consistent with the recovery in economic activities, but overall employment conditions remain weak.