Tourism boom shields Thailand’s economy amid political uncertainty

As political uncertainty continues to loom over Thailand, the country’s economy is receiving a much-needed boost from the significant increase in foreign tourists. In the first quarter of 2023, Thailand welcomed 6.5 million visitors, a stark contrast to the 498,000 recorded in the same period a year earlier. This surge in tourism is expected to help bolster the nation’s economy, even as export growth falters.

Thitima Chucherd, an economist at Bangkok-based Siam Commercial Bank (SCB), stated, “Tourism will be the key pillar supporting our growth this year.” Chucherd also noted that while government spending, consumption, and investment may be affected by the political situation, tourism is likely to remain unaffected.

Tourism’s resurgence as a driving force in Thailand’s economy comes as the nation awaits the outcome of recent elections. Pro-democracy parties secured the majority of seats in the House of Representatives, but the support of 250 military-appointed senators will be crucial in determining the next prime minister.

Any delay in government formation could impact the budget for the fiscal year starting in October, potentially affecting state spending. However, Thailand’s statistic agency secretary-general, Danucha Pichayanan, expressed confidence that the budget would not be delayed past the first three months of 2024.

Economists predict that Thailand’s gross domestic product (GDP) will grow 3.6% this year, up from 2.6% in 2022, making it the only Southeast Asian economy to experience faster expansion every year since the pandemic-induced downturn in 2020.

A significant factor in the growth of Thailand’s tourism industry is the reopening of China, which accounted for nearly a third of the country’s foreign visitors before the Covid-19 pandemic. However, Krystal Tan, an economist at Australia & New Zealand Banking Group, cautions that any escalation in political uncertainty could adversely impact tourism growth, as tourists are known to be sensitive to political instability, reports Bangkok Post.