Economy to rebound as the year progresses driven by exports and a return of mass foreign tourism
A Deputy spokesman at the Finance Ministry on Wednesday maintained Thailand will welcome not less than 5 million tourists this year and predicted a baseline growth rate of 2.8% could be pushed as high as 3.5% with exports and tourism firing on all cylinders towards the end of the year. It comes amid a surge in confidence driven by optimism over the effectiveness of vaccines.
Indications are that the government will move to reopen the kingdom on a more liberal basis this year as the Finance Ministry, this week, insisted that its figure of 5 million visitors will be met in 2021. It comes as the Prime Minister, Prayut Chan ocha, suggested vaccinated travellers may be given the green light to enter Thailand as the country’s economic planners respond to what looks like a 1.5% economic contraction in January.
There are fears that the Thai economy could have contracted by as much as 1.5% in the course of January as the second wave of the Covid-19 virus hit domestic activity while foreign tourism was still at a standstill compared to last year when millions of high spending travellers were still arriving in Thailand before the lockdown.
This effect is expected to be felt throughout the first quarter and is prompting government officials to prioritise the potential for economic recovery which must involve re-opening the kingdom’s borders sooner rather than later in 2021.
Vaccinated foreign tourists may be given easy access
Prime Minister, Prayut Chan ocha, prior to this Wednesday’s delivery of Thailand’s first doses of vaccines and the rollout of the kingdom’s vaccination campaign, hinted strongly that unrestricted entry to foreign tourists, who have proof of vaccination, is a rising issue on his government’s agenda.
This dovetails in with a system currently being trialled by the International Air Transport Association (IATA) although earlier this month, the Department of Disease Control boss at the Ministry of Public Health, Dr Opas Karnkawinpong, said such a regime would need to be authorised and coordinated with the World Health Organisation (WHO) to be in line with existing international law.
There are a growing number of positive indicators suggesting that the vaccines are working effectively while reducing transmission of the disease in a number of countries that got off to a head start.
Finance Ministry spokesman upbeat about foreign tourists and adheres to a target of 5 million visitors
At a briefing by the Finance Ministry on Wednesday, a deputy spokesman, Wuttipong Jittungsakul, made this quite plain: ‘The vaccines should help tourism and may draw more foreign tourists in the second half of the year,’ he told the press.
He revealed the ministry is holding firm on its projection of 5 million visitors entering Thailand in 2021.
This must mean lifting the 14-day quarantine rule and its associated infrastructure.
Under the current regime, figures announced this week, showed only 7,694 foreign tourists entered Thailand in January, down a massive 99.85% on the year before.
Last week, the National Economic and Social Development Council lowered its estimate to 3.2 million visitors.
Holding tight on growth projections with an upside
The Finance Ministry is holding tight on its growth rate projection of 2.8% for 2021 but believes that despite the poor start in January with a lagging domestic economy and a moribund foreign tourism sector, the two twin engines of the Thai economy, exports and tourism, can be made fire again in the latter half of this year.
Mr Wuttipong predicted growth of 3.0 to 3.5% could still be within grasp.
This was a view endorsed by Thanavath Phonvichai of the University of the Thai Chamber of Commerce who predicted the economy will recover.
Ministry of Commerce unveils a promising start to 2021 exports with double-digit growth across sectors
Over at the Ministry of Commerce, the outlook was also positive.
Minister of Commerce, Jurin Laksanawisit, revealed export figures for January that edged slightly ahead of those in 2020 compared to a surge of 4.7% in December.
However, when arms shipments, gold and oil were taken out of the picture, the month saw a 7.57% gain on this month last year.
Thailand had a trade deficit in January of $202.39 million based on cleared exports of $19.7 billion with $19.91 billion in imports.
Significant growth was seen in the outflow of Thai agriculture products such as fruit and vegetables, cassava and palm oil which surged by over 345% while other categories saw growth in the 34 to 38% range including pork exports.
Over a 200% rise in demand for rubber gloves
Many industrial sectors also saw double-digit export growth with a 200.5% surge in rubber glove demand.
‘Food, work-from-home products and home appliances, as well as Covid-19 protection products continued to soar. Moreover, major industrial products, such as automobiles and parts, electronic integrated circuits, and computers and parts showed signs of recovery, providing positive momentum for Thai exports in the future,’ the minister, Mr Surin, outlined.
Rising oil prices, a strong US stimulus and vaccine optimism is creating a buoyant trade environment
The new Director-general of the Trade Policy and Strategy Office, Phusit Ratanakul Sereroengrit, confirmed the international outlook was looking up with a dawning optimism over vaccine rollouts, a strong US stimulus package and rising oil prices.
‘The export trend is expected to improve from the global economic recovery, rising oil prices and Covid-19 vaccinations,’ he said. ‘If the export volume is averaged at $20.09 billion per month, export growth could reach 4% this year as targeted by the Commerce Ministry.’
Exporters happy with January’s data
This situation was confirmed by Ghanyapad Tantipipatpong of the Thai National Shippers’ Council who was satisfied with January’s figures when oil, arms and gold were stripped out.
However, industry insiders point to potential headwinds such as a lack of containers accompanied by a tightening transport and shipping market for exporters as trade begins to kick back into gear, worldwide.
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.