Slow tourism recovery can't lift Thailand economy yet

THE recent return of tourists to Thailand is unlikely to support recovery for now, analysts have said, in the wake of a slight economic contraction in October.

Barclays economists Brian Tan and Shreya Sodhani said on Monday (Nov 30) that "the return of tourists could be relatively slow" and will depend on a Covid-19 vaccine.

As such, they expect the services balance to improve only slightly, even as the current account surplus is tipped to narrow to 3.7 per cent of GDP in 2021.

To be sure, Thailand saw a reprieve in October from a six-month freeze on tourism, with about 1,200 long-term visitors from China, Cambodia, the Middle East and Europe.

But "we expect only a marginal boost from the arrivals, as the need for a long stay in Thailand owing to the quarantine period will likely discourage most visitors", Mr Tan and Ms Sodhani wrote in their report. "Ongoing political protests may also deter tourists."

That's even as Thailand's services exports shrank by 72 per cent in Q2 2020, far steeper than the 17 per cent drop in goods exports, on a tumble in international travel.

The Barclays economists added: "The Bank of Thailand's report on economic and monetary conditions said the economy contracted slightly in October... While Thailand received its first tourists in six months, a full recovery remains far off."

Similarly, DBS analysts noted in mid-November that "international arrivals will take time to improve, especially on the tourism front", amid ongoing talks with other governments, despite Chinese tourists returning to Thailand since late October.

Still, domestic consumption - which makes up about one-third of the Thai tourism industry - has been improving since April on pent-up demand, industry promotions, and stimulus measures, the DBS team added.