By James Harriman,

The Irrawady reports on Thailand’s growing economy and pick up in the tourism sector, but notes the need for caution,

“Despite political upheaval, Thailand’s economy is likely to grow by 6 to 7 percent  in 2010, though a slowdown in demand elsewhere could offset this, according to the Finance Minster Korn Chatikanvanij…

However, sounding a note of caution, Finance Minster Korn told a gathering at the Foreign Correspondent’s Club of Thailand on Wednesday night that the country’s trade- and export-dependent economy means that growth is predicated on demand elsewhere, with a possible slowdown in China worrying given that Thailand is already suffering from a drop-off in trade with Europe, which accounts for 12 percent of Thai exports…

The weakness of the euro against the Thai baht has contributed to a drop-off in tourist numbers, according to the Finance Minister. Tourism accounts for 6 to 7 percent of Thailand’s GDP and upward of one million jobs are tied to the tourism sector, with around 14 million visitors to the country each year. Korn said that Thailand needs “to shift its approach to the tourist sector,” citing the possibility of more co-investment and joint ventures from overseas

However, the relative winnowing-out of tourists spending money is not thought to be as significant a factor in Thailand’s tourism woes as the country’s four years of on-off political turmoil.

Previously, William Heinecke, CEO of Minor Group, a leisure company with operations in Thailand, lamented the impact of Thailand’s political turmoil on his sector’s demand and suggested that the government lift the current State of Emergency to help stimulate a tourism rebound.

Speaking at the same forum, Dusit Nontanakorn, the chairman of the Thai Chamber of Commerce, said that “tourism numbers are picking up now,” with hotel occupancy now between 40 to 50 percent, well up from the 10 to 20 percent lows experienced during the Redshirt protests and Bangkok street violence during March and May.”

I have put together a graph on Thailand’s tourism sector using data from the Tourism Authority of Thailand. The graph shows tourist arrivals from 2004-2010 and year-on-year changes. The colors red and blue denote and highlight the seasonal trends in the sector. I have also noted major events that have had varying impacts on arrival numbers. As you can see, the tourism sector has been subjected to a number of political events in recent years which have negatively impacted arrivals and industry growth.

For 2008-9, the decline in arrivals was also subject to other factors such as the global economic crisis. For example, in September 2008, the same month that Thailand declared a state of emergency and changed prime ministers, the U.S. Fed took over Fannie and Freddie, Lehman filed for bankruptcy, Merrill took over Bank of America, and the Fed lent $85 billion to prop up AIG. While the events in the US may not have hit September’s tourism numbers, the ensuing crisis most likely impacted arrivals and growth in the later months of the year and onwards.

What comes off striking from the graph is the arrival numbers during the main high season in 2009-2010. The arrivals from November to February are the highest in years despite the fact  the global economy remained in a period of uncertain recovery and only six months earlier the country experienced the political upheaval from the Songkran riots.

In all, the tourism industry displays remarkable resiliency. On the recent numbers, two caveats should be added.  First, the big spike in the July number is partly seasonal, and second, the huge annual percentage jumps during the 2009-10 high season are somewhat amplified because of the unusually low base numbers from the previous year.

 

James Harriman

harrimanjay@yahoo.com

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