Thailand Economic Focus: tourism industry plummets amid COVID-19 pandemic

For an economy whose staple is travel, Thailand’s tourism industry is taking a major hit amid the COVID-19 pandemic. Tourism is a major economic contributor to Thailand, with tourist receipts accounting for 11.5% of GDP in 2019, more than doubling from 5.2% in 2009. In addition, Chinese tourists account for the lion share of tourist arrivals, clocking 27.5% in 2019, followed by Malaysia (10.5%) and India (4.9%).

While the massive fiscal stimulus packages are surely welcomed by both corporates and individuals, tourism and its related industries such as hospitality, retail and transport will likely continue to drag on growth into the year ahead. According to the Ministry of Tourism and Sports, tourist arrivals had fallen to zero in April and May 2020 given the incoming travel ban then. For 2020, the Bank of Thailand expects tourist arrivals to clock merely 8 million persons (down from a prior outlook of 15 million persons, or a fall of 80% y/y), compared to 39.8 million persons in 2019.

According to UNCTAD, Thailand is one of the most heavily affected countries and stands to lose approximately US$47 billion in GDP for 2020 due to the contraction in tourism. Skilled workers in the tourism sector are expected to lose around 12% of their wages. For unskilled labors, employment is projected to decline 17% if the tourism sector is stopped for 4 months in Thailand.

To cope with a fall in tourism demand in the wake of the COVID-19 outbreak, the Cabinet approved two stimulus packages worth THB22.4 billion to boost domestic tourism. Under the We Travel Together promotion worth THB20 billion, the government will subsidize 40% of domestic airfares for up to 1,000 baht per seat and 40% of hotel room rates for up to 3,000 baht per night. Additionally, the Moral Support promotion, worth THB2.4 billion, will help fund holidays for 1.2 million health officials and volunteers. The funding for the two packages comes from the 1.9 trillion-baht economic stimulus package intended to cushion the impacts on Thailand’s economy and the Thai people from the COVID-19 pandemic.

As the tourism stimulus measures will likely trigger spending across Thailand during the third quarter of 2020, many issues including improving human capital and investing in transport infrastructure need to be addressed to ensure sustainable competitiveness in the tourism sector.

Moreover, in reviving tourism, Thailand should pay attention to making it green so that it can preserve the natural biodiversity for longer. The government should issue essential policies to enhance green solutions in developing tourism technical facilities in line with specific conditions in each locality such as the application of natural energy, the use of friendly materials and waste and wastewater processing and treatment. In this vein, Bhutan provides a good example of high value, low impact tourism that can help transform the way people travel, emphasizing meaningful experiences that both enrich the individual traveler and help to safeguard cultural and natural heritage. This crisis is thus an opportunity to rethink tourism for the future.

The views expressed within this publication are solely those of the author and do not necessarily carry the endorsement of the United Nations. Views expressed reflect the author’s judgment as at the date of this publication and are subject to change.