Above; Bangla Rd. Phuket

Krung Thai Compass, the state bank’s economic think tank has predicted that Thailand will lose ฿ 2.1 trillion in income before the end of the year in lost tourism revenue.

The trillions of baht in income has been lost to Thailand’s commercial sector which consists of established tourist firms such as hotels but also millions of once self-employed Thais who serviced the now-defunct industry.

Thailand’s tourist industry economy was estimated to account, in real terms, for 20% of its GDP due to the combined and varied nature of foreign tourism economic activity which directly and indirectly reached into the pockets of Thailand’s economic grassroots. Now it is simply gone.

This grassroots sector, for so long, was the key to Thailand’s resilience as an economy but this pandemic emergency is unprecedented. It has effectively cut the country off in the same way as a major war.

The events of 2020, it is feared, will have unpredictable consequences for the ‘real’ Thai economy which we are already beginning to see.

We are now beginning to see large swathes of the tourism industry have financially extended themselves to the limit while, at the same time, smaller firms and operators have closed or are closing. The shutdown’s impact is becoming structural.

This means that Thailand may not have the same tourism industry for visitors to come back to in 2021 nor is it still likely they will come back in the same numbers. The reasons for this include competition from other tourist destinations which have already reopened and diminished economic circumstances across the world.

Mr Yuthasak TAT (tourism authority of Thailand) expressed a view, in recent days, that 75% of Thailand’s visitors in 2021 will be from Asia but also this week, a Chinese diplomat in Bangkok, Yang Xin, deputy chief of mission at the Chinese Embassy, revealed that China was not ready to encourage its population to holiday abroad and that this may take some time.

What appears to have caught Thai planners off guard as well as economic analysts is that the domestic tourism market has also collapsed along with foreign tourism suggesting a link or combined dynamic between the two.

It could well be that foreign tourism is a catalyst that affects all parts of Thailand’s economy including, not surprisingly, inward financial investment and confidence in the economy.

Historical figures for January 2020 to April this year means that a failure to reopen Thailand to foreign tourism before the end of 2020 on a wider scale is likely to see sharper Thai GDP contraction in the first quarter of 2021, a period which is usually buoyant for the kingdom.

The bank is suggesting that Thailand may have to be prepared to wait for up to four years before tourism, as we knew it before, resumes in 2025. 

Even then, there is no guarantee that Thailand can ever regain its unique tourism market due to the disruption and changing environments both within a country once known as the Land of Smiles and without.