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According to the Bank of Thailand, growth will average 3.7% this year and 3.8% in 2024.
Thailand’s GDP rose 3.1% year on year in the April-June quarter, according to the consensus forecast of 21 analysts polled by Reuters, up from 2.7% in the previous quarter and driven by an increase in foreign visitor arrivals.
A smaller sample of forecasts in the Aug. 14-17 survey suggested that GDP was predicted to grow by a seasonally adjusted 1.2% per quarter, weaker than the 1.9% growth in the preceding quarter.
Although the nation’s tourism-based economy is expected to eventually recover, visitor numbers remain much lower than pre-pandemic levels. Thailand is expecting 29 million tourists this year, down from 40 million in 2019, the final full year before the COVID outbreak.
Exports, a key driver of development, have fallen since October 2022, indicating slow global demand, notably from China, Thailand’s major trading partner.
According to DBS analyst Chua Han Teng, “the economic expansion was supported by resilient private consumption and ongoing foreign tourism recovery among returning tourists, including those from China.”
“However, given the difficult global economic environment, the decline in merchandise exports, while stabilising, continued to drag headline growth and prevented a stronger growth improvement in 2023.”
According to a second Reuters poll, growth will average 3.7% this year, matching the Bank of Thailand’s forecast, and 3.8% in 2024.
The Thai economy exhibited optimistic signals of growth in the second quarter of 2023, with a preliminary estimate of a 3.1% increase in GDP. This expansion is mostly owing to an increase in tourist arrivals, a crucial Thailand sector that contributes heavily to the country’s GDP. Tourism was one of the hardest impacted sectors during the COVID-19 pandemic, thus this rebound is critical for Thailand’s economic recovery.
The COVID-19 pandemic had a negative impact on the Thai economy, which fell by 6.1% in 2020 as a result of strict lockdowns, reduced consumer spending, and a significant drop in overseas tourists. In a country where tourism accounts for roughly 20% of GDP, the sharp drop in tourist numbers was disastrous. However, the year 2023 has seen a steady recovery as limitations are eased and international travel gradually returns to routine.
Thailand saw a significant increase in tourist arrivals in the second quarter of 2023. Tourist numbers have increased dramatically in comparison to last year, signaling a watershed moment for the business, according to data.
The Thai government launched many steps to boost tourism, including the “Phuket Sandbox” program, which allowed vaccinated visitors to visit Phuket without being quarantined. This initiative’s success led to its development to other tourist spots such as Krabi and Samui. These actions increased tourist numbers and reestablished international trust in Thailand as a safe travel destination.
The flood of tourists had a knock-on effect on several industries. It increased hotel occupancy rates, revitalized the hospitality industry, and resulted in an increase in domestic spending when businesses reopened and job opportunities restored.
Thailand has achieved significant export growth in Q2 2023, in addition to tourism. The global economic recovery has increased demand for Thai commodities such as electronics, rubber goods, and agricultural output, contributing to Thailand’s positive GDP growth.
Covid-19 Effect on economy
Increased tourist arrivals have boosted domestic spending as tourism’s revived income and job prospects trickle down to various industries. Private investment has also increased throughout this time period, indicating increasing company confidence.
While the Thai economy appears to be improving, serious obstacles persist. Income inequality and household debt levels are issues that have been worsened by the pandemic and may provide challenges to long-term growth.
The COVID-19 epidemic, geopolitical tensions, and uncertain foreign markets all pose hazards to Thailand’s economic prospects.
Thailand’s GDP is expected to expand by 3.1% in Q2 2023, indicating a positive sign of recovery, with a surge in visitor arrivals playing a key role.
The government’s proactive attempts to reopen the country to tourists have paid off, revitalizing a key sector of the Thai economy. As Thailand faces new challenges, the rest of the world hopes that this cherished tourist destination will recover and thrive.