Thailand’s tourism sector to get boost from martial law lift

Visitor arrivals surged 40% after 6 months.

Preliminary data from the Finance Ministry indicates that tourist arrivals grew close to 30% (YoY) in February.

According to a report by DBS, growth is reported to remain strong at 28% in the first half of March. This is definitely encouraging news, given that the tourism sector contributes almost 10% of the country’s GDP. As of January, tourism arrival is about 40% higher than the recent low in June-2014 while hotel occupancy rate is some 20% higher. Both figures are seasonally adjusted.

Note also that the services balance in the current account has shown sharp improvement since late-2014 alongside the strong rebound in the tourism sector. Other than a sluggish domestic demand, continued strength in the tourism sector will help to keep the current account in surplus.

Here’s more from DBS:

We forecast current account surplus at 3.2% of GDP in 2015, large enough compared to the 1.5% average seen in 2010-2014.

Some recent developments are worthy to monitor going forward. PM Prayut suggested last week that the government may lift martial law, which could be taken as a positive signal for security issues in the country. Meanwhile, concerns over air safety certification in Thailand have surfaced, prompting the Japanese authorities to ban all Thailand-registered airlines to increase flights/passenger capacity into destinations in Japan. Several other countries are reported to be looking at similar restrictions. It remains to be seen if these concerns will also affect tourist arrival into Thailand, which will definitely be a negative for the sector.

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