Key meeting on Monday may see a clear decision on fully reopening Thailand to foreign tourism from October 1st which is very much dependent on the country’s vaccination programme and at the same time, progress in other countries. Without this, economic analysts see a downside to growth prospects even with a rebound in the kingdom’s exports seen so far in 2021.
A key meeting on Monday chaired by the Prime Minister will address the reopening of the country fully to foreign tourists by the 1st of October. It comes as government officials are increasingly concerned at the potential fallout of the continued closure of Thailand’s borders to foreign tourists and the potential to disrupt the country’s economic prospects this year with exports rebounding.
A meeting, on Monday, of the Centre for Covid-19 Situation Administration will consider the easing or elimination of quarantine requirements for incoming tourists from October 1st.
This was the information given by Apisamai Srisangson, an assistant spokesperson with the CCSA last week, who said the final decision will be made on Monday by Prime Minister Prayut Chan ocha who will chair the meeting.
It is understood the government is particularly concerned at the damage done to the country’s tourism industry which has left millions underemployed in its aftermath since the closure of Thailand’s borders in April last year.
Exports are looking up for 2021 as SCB economic analysis unit raises GDP growth projection to 2.6%
It comes as an economic update from Siam Commercial Bank, this week, showed a rise in projected GDP growth for 2021 on the back of a resurgence in the kingdom’s exports linked with a worldwide recovery, especially in the United States.
The bank’s Economic Intelligence Centre (EIC) saw Thai exports pulling ahead in 2021 by up to 6.4% compared to an earlier projection of 4%.
However, analysts saw a problem in the domestic economy where underemployment and lost income levels caused by the disruption of the foreign tourism industry have not been rectified.
Many of the workers employed in the industry have not adapted to other employment opportunities and the bank has highlighted this ‘mismatch’ of skills in the labour market as another source of concern for Thai planners.
Vaccination campaign is the critical factor
The bank saw the national vaccination campaign as the critical factor in reopening the country to mass tourism and saw this happening in the fourth quarter of the year.
It also expressed confidence that the Thai baht, which recently lost value against the US dollar amid a change in market sentiment in the United States which saw rising 10-year treasury bond yields indicating inflationary pressures.
It predicted this to hover within the ฿30 to ฿31 range for the rest of 2021.
Analysts predict only 2 million foreign tourists
At Kasikorn Research Centre, however, analysts saw reason for a downside view as concerns were raised that tourist arrivals in Thailand may be as low as 2 million this year.
Most analysts are working off a figure of 5 million visits being achieved in the last three months of the year with the current number of tourists arriving being off by over 99.8% due to the countries burdensome 14-day quarantine requirement.
Recently announced quarantine easing measures will not do the trick of reviving the foreign tourism industry
Even just announced plans to lessen this from 14 days to 7 and 10 days are thought not to be adequate to reignite the foreign tourism industry based on an International Air Transport Association (IATA) survey, last year, which showed 84% of international travellers and potential tourists would rule out a holiday involving any aspect of quarantine.
This figure is reinforced by Thailand’s own experience since the Covid-19 emergency began even with more flexible visa opportunities in the last four months.
‘Thailand’s path to economic recovery will mostly depend on the tourism industry as to when the country will reopen for foreign tourist arrivals. The Covid-19 vaccines and the policy of each country will have a significant impact on the recovery of Thailand’s tourism industry in 2021,’ said Kevalin Wangpichayasuk, Assistant Managing Director with Kasikorn Research Centre. ‘Other crucial factors are whether Thailand’s quarantine period is reduced, the clarity of vaccine passport policy and if countries would allow their citizens to travel to Thailand.’
Asset warehouse scheme is critical to prevent an industry-wide collapse with a fire sale of heavily indebted tourism-related properties
Analysts suggest that the government still has ฿390 billion to prime the domestic economy but must earmark a significant amount of this for soft loans targeted at economic sectors hardest hit by the Covid-19 emergency including a plan to support the airline industry and an ambitious asset warehousing plan.
The latter is being developed by the Bank of Thailand and the Finance Ministry.
It is considered critical in order to prevent a collapse of the foreign tourism sector which is now at its most vulnerable point after nearly a year cut off from its markets and the prospect of another six months before the industry has an opportunity to come back to life.
It is thought that, without this, many struggling firms will fail in the meantime creating another wave of employment losses and fire sales of heavily indebted assets which could have even more serious ramifications for the Thai banking sector.