The Bank of Thailand anticipates that the recent earthquake will further hinder the already sluggish recovery of the property sector and affect foreign tourist arrivals.
Initial assessments from the central bank indicate that this tragic event will have repercussions across three major sectors: property, tourism, and domestic consumption, as stated by Sakkapop Panyanukul, assistant governor of the Bank of Thailand’s monetary policy group.
“In light of the disaster, the Bank of Thailand predicts a slowdown in rental and sales activity for high-rise condominium developments, which are already struggling with a weak recovery and an oversupply of residential units,” he said.
Concerning tourism, Mr. Sakkapop mentioned that media coverage of the earthquake could diminish foreign tourists’ confidence in traveling to Thailand. The central bank expects some international travelers to postpone or cancel their trips; however, these cancellations are anticipated to be minimal, consistent with the short-term impact of the disaster.
Historically, past disasters in Thailand have shown that foreign tourists generally return quickly. The speed of this recovery will rely on how effectively all stakeholders work to restore tourist confidence.
The disaster is also likely to reduce domestic consumption, as affected individuals may prioritize home repairs over spending, potentially leading to a downturn in overall expenditure. Nonetheless, insurance claims, government support measures, and assistance from financial institutions are expected to mitigate the adverse effects.
“It is still too soon to fully gauge the economic impact of this disaster. The Bank of Thailand needs comprehensive data, including direct economic effects and behavioral responses from businesses and households, to accurately assess the overall impact,” Mr. Sakkapop remarked.
He further noted that the disaster has not broadly impacted household incomes. Due to the transient nature of this shock, the central bank does not foresee a significant effect on household earnings.
In a related update, the central bank reported economic data for February, revealing a softening of Thai economic activity compared to the previous month. This decline was particularly notable in the tourism-related service sector, as both the number of foreign tourists and their spending saw a decrease.
According to Pranee Sutthasri, senior director of the Bank of Thailand’s macroeconomic department, foreign tourist arrivals and total revenue, adjusted seasonally, fell by 13.9% month-on-month in February, with the tourist receipt index dropping by 9.4%. This downturn in foreign arrivals was mainly attributed to a decrease in visitors from China and Malaysia following a surge during the Chinese New Year celebrations, with safety concerns, especially among Chinese tourists, contributing to the decline. However, arrivals from other countries, including Japan, India, and Russia, continued to rise.
On a more positive note, the seasonally adjusted value of merchandise exports (excluding gold) in February experienced a month-on-month growth of 4.9%, driven by increased exports in multiple sectors, partly due to expedited shipments to the US in advance of impending new tariff measures.
