Thailand saw slower growth of foreign tourist arrivals of 4.2% last year and the outlook for a lucrative industry is weighed by strength in the baht and China’s new coronavirus at a time of faltering economic growth.
Tourist receipts account for about 12 percent of Southeast Asia’s second-largest economy, making it one of the most important drivers of growth for an economy that has lagged most regional peers for years.
Foreign tourist arrivals hit a record 39.8 million last year – equivalent to more than half of Thailand’s population – after a rise of 7% to 38.2 million in 2018, when a boat accident killed dozens of Chinese tourists, tourism ministry data showed.
Tourist revenue had risen 3% to 1.93 trillion baht ($63.49 billion) in 2019. Visitors from China, Thailand’s biggest source of tourists, increased by 4.4% to 10.99 million in 2019.The growth in foreign arrivals had slowed and missed a government target, and industry operators have blamed that on the strong baht, Asia’s top performer last year.
The baht THB=TH rose nearly 9% against the U.S. dollar and about 11% against China’s yuan CNHTHB=R last year.
The Tourism Council of Thailand last week forecast less than 5% growth in overall foreign tourist numbers this year.Kasikorn Research Centre on Friday predicted the number of Chinese tourists may fall 0.5%-2.0% this year, rather than the 1.6%-3.5% increase projected earlier.
China’s coronavirus has added to the concerns. Thailand on Friday confirmed its fifth case of the virus and Saturday’s start of the Lunar New Year holiday is expected to bring an influx of Chinese travelers.”The outbreak of coronavirus is a risk. The strong Thai baht may also affect tourism growth,” said Tim Leelahaphan, economist of Standard Chartered.
“That is unlikely to help an already-slowing economy,” he said adding he expected the central bank to cut its policy rate by a quarter point in the first quarter.
The Bank of Thailand (BOT) cut the key rate twice in 2019, taking it to a record low of 1.25%. It will next review monetary policy on Feb. 5.The BOT forecast economic growth of 2.8% this year, slightly picking up from an estimated 2.5% in 2019, a 5-year low.