Bank of Thailand official says reopening to foreign tourism vital to kingdom’s 2021 economic hopes
On Tuesday, the cabinet was presented with a ฿210 billion free cash payments scheme aimed at 31 million Thais. This came in addition to smaller reliefs also announced last week on utility bills and other costs to help ease the hardship on the less well off. The Bank of Thailand economic expert highlighted the strategic importance to Thailand right now of the vaccination programme and reopening to the foreign tourism industry which she pointed out also had a bearing on the property sector.
Although the Thai government is reportedly managing to suppress this current second wave with hopes that the infection trend will move gradually lower from the end of the month, the outbreak has undoubtedly hit consumer confidence and left the tentatively recovering economy in a state of uncertainty. A senior Bank of Thailand official, this week, said that it will certainly set the kingdom back in the short term at a minimum, paring back 1% of GDP. Chayawadee Chai-Anant, however, highlighted the strategic importance of the kingdom’s vaccination programme right now to the economy and the potential upside of reopening Thailand to foreign tourism. In the last 24 hours, the Governor of the Tourism Authority of Thailand, Yuthasak Supasorn, has said that October 1st will be the day that Thailand reopens fully to foreign tourists with 10 million visitors expected by the end of 2021.
The Bank of Thailand has projected that even if the government can manage to bring the Covid-19 outbreak under control relatively quickly following the second wave, it is still likely to have a 1 to 1.5% negative effect on this year’s projected GDP growth rate bringing the projected figure for growth closer to 2%.
An analysis of the Thai economy was presented in recent days by Chayawadee Chai-Anant, the Director of the Economic and Policy Department at the bank.
Thailand runs the risk of a second year of GDP contraction in the worst-case scenario but not as bad as 2020 with a foreign tourism boost upside
She gave two further scenarios. First would be that more stringent steps may be necessary as time moves on in the coming weeks or months. Ms Chayawadee indicated that this could see a harder hit to the economy leaving projected GDP growth at 0.7 to 1.2%
The third is that even with more stringent action taken by the government, it still fails to avoid a second lockdown.
This would inevitably be catastrophic and lead to a loss of up to 4% of GDP this year on the assumption that even if this happens, it is unlikely to be as devastating as last year’s shock to the system.
However, it could see the Thai economy contract for the second year in a row.
Consumer confidence and reopening foreign tourism are the keys to a rebound says top bank economist
Ms Chayawadee sees consumer confidence as a vital factor going forward as well as an urgent need to reopen the foreign tourism industry.
The key to this is Thailand’s vaccination programme which she sees taking place towards the end of the year leading to a reopening of mass tourism.
She emphasised that her analysis and projections did not provide for an upside to the economy if incoming tourists exceeded projections as the government is now plainly suggesting.
‘Right now, we can see a light at the end of the tunnel, largely supported by vaccine development,’ she told the media in her briefing. She highlighted the importance of foreign tourism to the economy not only for the hotel and transport sector but also for the kingdom’s property industry.
Further evaluation of prospects when the Monetary Policy Committee of the Bank of Thailand next meets
Ms Chayawadee said further evaluation of the outlook needs to be made following the next Monetary Policy Committee meeting at the Bank of Thailand but that, in the short term at least, a revision downwards of GDP prospects for the year was likely.
‘Several economic research houses have lowered their GDP growth forecasts for this year mainly due to the latest outbreak, and the central bank has a similar assessment. However, we need to evaluate more economic data and the direction of the Monetary Policy Committee before announcing the actual revision,’ she concluded.
Tourism chiefs in unison say that Thailand will reopen to foreign tourists and achieve 10 million visitors this year from a October 1st re-opening
Both the Governor of the Tourism Authority of Thailand, Yuthasak Supasorn and the Minister of Tourism and Sports, Phiphat Ratchakitprakarn, have in recent days confirmed that Thailand is projecting 10 million visitors in 2021 with Mr Suthasak indicating on Tuesday that the gate to the kingdom will be open by October 1st this year.
Meanwhile, Mr Phiphat has confirmed that he is in talks with the Minister of Labour, Suchart Chomklinn to see if a co-payment arrangement can be made for hotel staff left unemployed by the latest emergency.
Last weekend, hotel owners in Chonburi and Pattaya called on the Governor of Chonburi, Pakkhathorn Thianchai, to order the closure of their hotels so that they could avail of this scheme under present legislation.
฿210 billion in cash payments for two months
On Tuesday, the cabinet approved a package of two direct payments of ฿3,500 each to be made to the public which may be available to up 31 million Thais who are self-employed, on social welfare or working in the farming sector.
Those eligible will have to show marginal or no levels of personal savings.
The package is projected to cost the government ฿210 billion. The move aims to alleviate hardship and help prime the economy as it labours under the latest setback.
Consumer confidence has been hit following tight local restrictions in many red zones of infection across key provinces notably in the vicinity of Bangkok including Rayong and Chonburi.
The Finance Ministry made the proposal to the cabinet on Tuesday for what is called the ‘RaoChana’ (We Win) programme for which applications will open shortly.
Details of the package were given by Kulaya Tantitemit, the acting Director of the Fiscal Policy Office.
The package comes in addition to small discounts agreed earlier this week on electricity and water charges for customers across the country.
Banking sector has a crisis team in place since the onset of the second wave of the virus in recent months
Banks are also keeping a close eye on the current situation with the Thai Bankers’ Association operating a crisis management team to cooperate over the coming weeks.
Although officially, debt relief efforts authorised by the Bank of Thailand ended at the end of October last year, it was reported that while approximately 66% of borrowers returned to normal, some 32% were still in need of continued financial assistance at this time. The figure was marginally lower for corporate debtors.
Attention being paid to struggling borrowers
Kobsak Duangdee is the Secretary-general of the Thai Bankers’ Association.
He says members including all commercial and retail banks as well as banks with a presence in Thailand were participating in the scheme with special attention being paid to struggling borrowers.
‘Banks will need more time to analyse customers’ ability for debt repayment given the new outbreak. An analysis of the non-performing loan outlook of the commercial banking sector is also necessary,’ said Mr Kobsak.
It comes as last week the GSB or Government Savings Bank rolled out its own debt easing programme aimed at its borrowers in 28 provinces hardest hit by the current outbreak covering ฿670 million in loan funds.
The bank has offered a suspension of debt principal repayments and lower interest rates to accommodate its customers.
About the Author
Joseph Anthony is an expat from Ireland who has lived in Thailand for the last decade. He has worked extensively in the media including editorial positions in Ireland and Thailand. He is focused on economic and business stories in Thailand as well as the expat lifestyle.