Thailand to see modest growth in 2021; tourism to remain flat

THAILAND is expected to see modest economic growth in 2021, with international tourism expected to remain flat, according to a Citi report.

"We do not expect international tourism to contribute to GDP growth in 2021 as a base case," Citi economists said.

Tourism revenues could come close to that of 2020, the report said, which would be an estimated US$10.2 billion based on the 6.7 million arrivals in 2020. This is equivalent to 2.1 per cent of gross domestic product (GDP) in 2020.

"Admittedly, the 2021 scenario may require several assumptions with factors that remain fluid to date: global pandemic situation, timing of vaccines availability, the speed of border reopening at home and abroad, as well as the provision of quarantine facilities locally to provide for the return of safe tourism," said Citi economists.

They are expecting GDP to grow 4 per cent in 2021, after shrinking 6.8 per cent in 2020.

Given that tourists have to spend two weeks in quarantine, Citi economists suggest it may be possible for the country to maintain revenues even from just 1.2 million arrivals in 2021.

A NEWSLETTER FOR YOU

Friday, 8.30 am

Asean Business

Business insights centering on South-east Asia's fast-growing economies.

Sign Up

The report added that most of these arrivals are likely those with reasons to stay longer than a month - for example, business owners, investors or those seeking medical services.

However, the availability of vaccines could boost tourism confidence in the second half of the year, Citi economists said. They noted that Thailand has signed an agreement with AstraZeneca to procure 26 million vaccine doses, while a separate agreement allows production by local firm Siam Bioscience.

"Beyond 2021, we expect tourist arrivals to gradually return," Citi economists said.

It added that the 39.8 million arrivals clocked in 2019 were due in part to visa-on-arrival fee waivers for about three years, which were aimed at fast-growing tourism markets such as India, China and Russia.

"But the waivers may be removed due to pandemic precautions. Higher-end and value-added tour packages are likely to be the focus instead of mass-market holiday packages," they added.