Tourism is a big part of Thailand’s economy. It used to contribute more than 17% of the money coming into the country and employed 20% of the population. Even though the global economy isn’t doing so great,
the tourism sector is expected to help Thailand’s economy stay strong. In 2021, the industry was still struggling because of Covid-19, but things started to get better in 2022, and this year is expected to be even better (although it won’t reach pre-Covid levels). The main reason for this improvement is Chinese tourists. As travel restrictions are lifted and China opens its borders, lots of Chinese tourists are expected to visit Asia, especially Thailand. In 2019, Thailand was their favorite destination, and they made up more than a quarter of all visitors to Thailand.
Good News for Thailand Economy
This is really good news for Thailand because demand from the West for Thai exports is slowing down. So, the reopening of China, which used to be Thailand’s second biggest export market, can help offset that. As a result, Thailand’s economy is expected to get stronger. The International Monetary Fund (IMF) predicted that Thailand’s growth rate would increase to 3.7% this year (compared to 3.2% in 2022). However, there is a risk related to the upcoming general elections in May. If there is a dispute over the outcome and protests happen against the military-backed government that has been in power since 2014, it could affect the tourism industry. source
Thailand’s economy will get stronger
If Thailand’s economy gets stronger, it will boost confidence and show that the government’s policies are working. This is already happening as the Thai currency, the baht, has been doing well. It has become stronger compared to the US dollar, appreciating by 5% in the past year, which makes it the most stable currency in Asia.
Improved tourism prospects are also expected to help Thailand’s current account balance go back to a surplus this year, like it has been for most of this century. It might also help increase the foreign exchange reserves, which have been decreasing for the past two years. At the end of 2022, the reserves only covered less than 7 months of imports, the lowest in nine years. source GmaAsia
Apart from the slowing demand from other countries, the ongoing war in Ukraine is another risk that could affect Thailand’s economy.
Inflation in Thailand
It could increase the cost of imports and raise energy prices. Inflation reached an average of 6.3% in 2022. However, it has been going down in recent months and was at 5% in January. This is because energy prices are getting more stable, and the Bank of Thailand has been trying to control inflation by raising interest rates. They have increased rates multiple times since August, and by the end of January, they reached 1.5%. The goal is to keep inflation between 1% and 3%. The boost from Chinese tourism might slow down the gradual decrease in inflation throughout the year.
- The tourism industry is one of the pillars of the Thai economy,
- Chinese tourists constitute the largest group of foreign tourists to Thailand.
The economic outlook for Thailand in 2023 appears promising, with expectations of a gradual recovery and strengthening of key sectors. The country’s tourism industry, a major contributor to its economy, is expected to see improvements as international travel resumes and Chinese tourists return. This influx of visitors is anticipated to provide a much-needed boost to the tourism sector, supporting economic growth and employment.