Tourists may skip Thailand as baht makes gains: Report

Tourists shop for cosmetics at a duty-free store in Bangkok.
JUNE 21, 2019 - 5:23 PM

THAILAND’S visitor numbers could take a hit from a strong baht, an analyst has warned.

And exports could also stay depressed, amid a broad contraction, as the baht gained 12 per cent between end-2016 and May 2019.

All told, the Thai economy has faced a net negative outcome from the global slowdown and trade tensions between the United States and China - despite the lift from trade diversion in exports to the US, according to Citi analyst Nalin Chutchotitham.

Tourist arrivals were up by 1.6 per cent on the year prior in the first five months of 2019, slower than the 8.8 per cent increase posted in 2018.

Despite a strong expansion in the volume of visitors from South Korea, Japan, and Taiwan, Thailand has seen a year-on-year drop in Chinese arrivals, as well as easing growth in visitors from the Philippines and Singapore, Ms Nalin noted.

She believes that this could be the result of more competition for tourism, as well as an increase in the bite from the baht’s value.

Meanwhile, key exports goods such as chemicals, automotive parts and integrated circuits were down year on year, although jewellery and cosmetics enjoyed double-digit trade growth.

“Although Thailand’s exports are well-diversified in terms of products and markets, the significant appreciation of the baht recently is likely to hurt exporters further,” Ms Nalin said.

Still, weakness in imports points to subdued export and domestic demand, she added.