The Bank of Thailand forecasted that the earthquake will exacerbate the sluggish recovery in the country’s property market as well as weigh on foreign tourist arrivals.
Assistant Governor Sakkapop Panyanukul of the Central Bank Monetary Policy Group estimated that the disaster will hit three key economic segments: property, tourism, and domestic consumption.
The Bank of Thailand anticipates rentals and condominium purchases in high-rise buildings to slow following the catastrophe put pressure on already vulnerable property market with large supply,” Sakkapop said.
From a tourism point of view, media news of the earthquake can erode confidence among foreign visitors to travel to Thailand. The central bank expects some foreigners to postpone or cancel their visits, but the overall cancellation rate should be low given the short-term nature of the impact.
Taking a cue from previous tragedies, Sakkapop added that foreign visitors tend to return within a short period, but recovery depends on a plan to restore tourism confidence.
Domestic consumption also will be influenced by the tragedy, with hit residents placing repairing their homes topmost priority, and could reduce aggregate consumption. But it is projected to ease some economic pressures with claims paid out, government compensation, and financial sector assistance.
It is too soon to determine the full economic impact of the disaster at this stage,” Sakkapop said. “There must be systematic data on direct economic effects and behavioral responses from businesses and households in order to have a full evaluation.”.
Despite the setback, he added that the tragedy has not significantly affected family incomes, and the central bank does not anticipate a large impact on earnings since the shock is temporary.
Decline in Tourist Arrivals
Meanwhile, the Bank of Thailand released its February economic data, which indicated a drop in Thai economic activity from the month before, particularly in the tourism-related service sector. Foreign tourist arrivals and expenditures declined, with international tourists and total revenue dropping 13.9% and 9.4% month-on-month, respectively, according to Pranee Sutthasri, senior director of the central bank’s macroeconomic department.
Foreign tourist decline was largely due to the drop in Chinese and Malaysian visitors following a peak at Chinese New Year. Safety concerns, especially among Chinese tourists, also contributed to the decline. Foreign visitors from Japan, India, and Russia, however, continued to rise.
Export Sector Sees Growth
On a brighter note, Thailand’s merchandise exports (excluding gold) grew by 4.9% month-to-month in February. The growth was partly driven by accelerated shipments to the US preceding impending tariff measures effective tomorrow.
While the country navigates the economic fallout of the earthquake, all stakeholders will need to come together to restore confidence and attain rapid recovery for the affected industries – Bangkok Post
