Key threat to Thailand’s economy as the year progresses is an elevated level of inflation and the slowing of economic growth in the United States which is a key market for the kingdom. Foreign tourism is a bright spot with tourists from China again trickling into favourite hotspots such as Pattaya and more flight links planned from the Communist country.
A top government committee on Friday chaired by Prime Minister Prayut Chan ocha agreed to extend the stay for visa-on-arrival tourists for select foreign visitors to up to 45 days commencing on October 1st. The move comes as the government works to maintain the momentum of the foreign tourism recovery with Thailand on target to welcome over 1.2 million visitors in August and the Tourism Ministry now confident that the country may be poised to welcome 10 million visitors this year which could boost projected GDP growth for 2022 set by the Bank of Thailand at 3.6%.
Thailand’s Centre for Covid-19 Situation Administration (CCSA) on Friday agreed to proposals presented by the Ministry of Tourism and Sports developed in consultation with the country’s tourism industry, to strengthen the country’s foreign tourism recovery by extending the visa terms for incoming tourists from October 1st 2022 to the 31st March 2023.
The new terms agreed upon will see travellers from 50 countries who are currently granted a 30 day tourist visa on arrival in Thailand being entitled to an extended period of stay in the kingdom of up to 45 days.
Travellers from other countries such as China and India will see visa stays doubled from 15 to 30 days
Travellers from other countries including China, India and Saudi Arabia will see their 15-day visa-on-arrival period extended to 30 days by Immigration Bureau officers on arrival in Thailand.
The move was confirmed to the press by CCSA spokesman, Dr Taweesilp Visanuyothin. ‘We are looking to extend their stay,’ the top official said. ‘This will help boost tourist spending, revive the economy and reduce the impact of the coronavirus pandemic.’
The move is coming as the growth in foreign tourism arrivals gains momentum with a further 660,000 approximately arrivals seen in the first 17 days of August putting the kingdom on target for 1.2 million visitors this month.
Emergency Decree to remain in force after the kingdom’s health emergency is downgraded
Reporters questioned the Thai prime minister on the status of the country’s emergency decree after public health officials also confirmed that there are plans to end the medical emergency in October by downgrading the status of Covid to a disease that needs to be monitored by the emergency body under the auspices of the Ministry of Public Health.
However, General Prayut Chan ocha was clear that the decree would remain in force to allow the government contingency powers to coordinate government agencies and preserve the safety of the public at this time.
‘It is still necessary to integrate the operations of various agencies. The decree is not intended for other purposes. It is only meant to ensure the public is safe from Covid-19,’ he told the media after the meeting.
Foreign Minister Don Pramudwinai tells reporters the best environment for the Asia-Pacific Economic Cooperation (APEC) Summit would be no protests
Reporters also addressed questions to Deputy Prime Minister and Minister of Foreign Affairs Don Pramudwinai on whether the decree may impede the kingdom’s image as it hosts the Asia-Pacific Economic Cooperation (APEC) Summit in November.
He rejected this saying the kingdom has already played host to important events and meetings in recent times.
He retorted that the best environment possible for holding the key summit, at which it is still possible that major world leaders including US President Biden, Russia’s President Putin and even China’s President Xi Jinping may attend in person, would be one free of street protests.
Economic growth is rising led by foreign tourism, public expenditure and consumer confidence
The Thai economy grew at only 2.5% in the second quarter of 2022 but there are already noticeable signs of improvement in the third quarter with export growth continuing albeit at a more moderate pace and rising consumer confidence.
The Ministry of Finance is also reporting strong public investment expenditure with curbs that had stymied economic activity earlier in the year having now been lifted according to Minister Arkhom Termpittayapaisith.
Thailand’s central bank, at present, predicts growth of 3.6% this year but this could rise significantly if foreign tourist arrivals of 10 million are achieved as opposed to the 6 million currently forecast by the Bank of Thailand with the possibility that growth could reach 4.5%, well ahead of most projections at this time.
Key concern for the rest of this year is elevated inflation which hit a 14-year high in July at 7.61%
One of the key concerns for the kingdom, right now, is inflation which hit 7.61%, a 14-year high for Thailand, with the central bank having a target rate of 1% to 3%.
It is expected to remain elevated throughout the year with an annual rate of 6% being predicted although the central bank believes this will moderate towards its policy target level from the start of 2023 to the middle of next year.
To that end, there are some encouraging signs with West Texas Intermediate (WTI) crude oil prices currently standing at $89.97 having reached a high of $121.33 in early March after the Russian invasion of Ukraine. This is within the range that existed before the war.
However, despite improvements in July in food prices across the world reported by the UN Food and Agricultural Organisation, prices in the store and on shelves are still rising due to supply chain factors and a significant time lag.
Fears rising core inflation in the developed world may impact Thailand with no signs yet of it falling
There is also concern that rising core inflation in the developed world may feed its way back into Thailand’s economy.
These fears are echoed by Mr Tim Leelahaphan, a senior economist at Standard Chartered Bank. ‘There’s no clear sign that inflation would clearly come down or significantly fall,’ he warned this week.
This month, Chua Han Teng, an economist with DBS Bank in Thailand made it clear that the kingdom’s economy in 2022 was dependent on the current foreign tourism revival that is underway.
‘Thailand’s crucial tourism sector is a significant part of the economy, and a faster-than-expected revival should lift overall growth,’ he revealed. ‘That said, the tourism sector’s significant reliance on Chinese tourists suggests a full recovery to pre-pandemic numbers remains quite some time away if China does not loosen its zero-Covid policy.’
Chinese tourists trickle back to key hotspots with more flights between China and the kingdom planned
Prospects have been brightened further in recent days with some Chinese tourists again being seen in key tourist hotspots such as Pattaya and a call from Chinese authorities to the Civil Aviation Authority of Thailand (CAAT) to increase flights between China from three per week to fifteen.
This follows a survey in China on favoured holiday destinations with Thailand being ranked fourth, behind South Korea, Japan and the United States but, significantly, ahead of France.
However, economists such as Mr Han Teng remain cautious with a poll of respondents predicting only 3.4% growth this year for the Thai economy with fears of an uncertain global outlook.
‘Heightened fears of a global recession amid an uncertain environment could act as a drag on Thailand’s economy and pose downside risks to our growth forecast,’ he has warned, with fears that growth in the United States, Thailand’s biggest export market, is stalling.