Thailand’s economy contracts, hopes of tourism-led recovery

Thailand’s economy contracted in the third quarter, official data showed Monday, but hopes for a gradual recovery are growing after the kingdom reopens to foreign tourists this month.

The country recorded its worst performance last year since the Asian financial crisis of 1997, with an economic contraction of 6.1 percent.

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Gross domestic product fell 0.3% year-on-year in the third quarter, the Office of the National Council for Economic and Social Development (NESDC) said, blaming it on the Covid restrictions.

“The epidemic control measures have affected economic activities,” Danucha Pichayana, secretary general of the NESDC board of directors, told a press conference on Monday. A coronavirus outbreak in April this year saw the emergence of the highly contagious Delta variant, which led to the reimposition of strict restrictions on services and restaurants.

According to NESDC data, the restaurant and accommodation sector fell 18.6% from July to September due to a “decrease in domestic tourism and household spending”.

In Bangkok – a hotspot of the Delta Wave – restrictions have only started to ease in recent weeks, with the government allowing some restaurants to reopen and serve alcohol.

The easing of Covid restrictions – as well as a gradual return of foreign tourists vaccinated since November 1 – have officials hope for growth of 1.2% this year.

The country also expects five million tourists to return next year, generating revenues of up to 440 billion baht ($ 13.4 billion), the NESDC said.

Travel restrictions in the event of a pandemic have caused the number of visitors to Thailand to drop from 40 million in 2019 to just 73,000 in the first eight months of 2021.

Danucha said the forecast for 2022 is between 3.5% and 4.5% as Thailand slowly recovers from the pandemic. But with China – the source of most foreign travelers to Thailand before the pandemic – still restricting returns, the kingdom’s cash cow industry is unlikely to make a full recovery before 2024, experts say.

Thailand has so far recorded more than two million cases of coronavirus and more than 20,000 deaths.

The majority of infections occurred after the emergence of the Delta variant.

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