Tourist surge to propel economy in 2nd half

Tourists walk around the outside of the Temple of the Emerald Buddha within the Grand Palace grounds on July 18, 2022. (AFP photo)

The Thai economy will continue to recover in the second half of this year, supported by all the indicators including private consumption and foreign tourist arrivals, says a Bank of Thailand executive.

Chayawadee Chai-Anant, a senior director at the central bank, said the tourism sector is a key factor driving the country’s economic recovery in the second half of this year.

Given the improving number of foreign travellers in June at 765,500, up from 520,000 in the previous month, the full year’s tourist numbers could be even higher than the central bank’s current forecast of 6 million.

Ms Chayawadee added that the central bank is maintaining its existing 2022 GDP growth rate estimate at 3.3% as Thailand’s economic recovery has been accelerating, with several indicators improving both in June and the second quarter.

However, the central bank would also be closely monitoring global and local economic circumstances amid several uncertainties, she added.

The Fiscal Policy Office (FPO) said on Tuesday it has kept its forecast for economic growth this year at an average of 3.5%, underpinned by a recovery in both the tourism sector and domestic consumption.

The FPO has also revised upward its projection of the number of foreign tourist arrivals this year to 8 million, from April’s prediction of 6.5 million.

According to the central bank’s report on the economic and monetary conditions for June and the second quarter of 2022, the Thai economy improved in June 2022 compared to the previous month.

Private consumption indicators, after seasonal adjustments, remained at a similar level from the previous month.

Consumption increased in almost all categories except for durable goods as deliveries of passenger cars were delayed due to shortages of production materials.

Private investment indicators, after seasonal adjustments, continued to improve from the previous month in machinery and equipment, as well as construction. This was in line with the recovery of manufacturing sectors and the overall economy.

The number of foreign tourist arrivals, after seasonal adjustments, continued to increase from the previous month among almost all nationalities. This was a result of the government’s abolition of the Test & Go entry scheme on May 1, 2022, in conjunction with fewer cross-border restrictions, while other countries continued to relax their own travel rules.

Manufacturing production, after seasonal adjustments, picked up in several sectors such as automotive, food and beverages, and petroleum. This was mainly due to increases in commercial car production, easing of the Covid-19 containment measures which allowed alcoholic beverage consumption in restaurants, and fewer travel restrictions to attract more foreign tourists.

Nevertheless, production of integrated circuits and semiconductors declined in line with the slowdown in integrated circuit exports.