Please note: The information, facts, and figures in this article are correct as of the publication date (1st April 2020).
The global COVID-19 pandemic has caused widespread instability in global markets and the resolution is not yet in sight. Thailand’s geographic and economic ties to China, where the outbreak began, initially positioned it as one of the highest-risk countries worldwide.
But a proactive approach to containment and safeguarding the economy could put Thailand in good stead to recover from the crisis and minimise disruption to its future plans for transformation.
All in all, what does this mean for existing or future investors in one of the most exciting economies in Asia-Pacific?
There are no two ways about it: Thailand’s tourism sector has suffered enormously since coronavirus started making headlines. Tourism accounts for around 13-14% of Thailand’s economy and the outbreak happened in the middle of peak season. In particular, Chinese tourists accounted for 27.6% of the country’s record-breaking 39.8 million international visitors last year.
So far, the figures have been bleak. Tourist arrivals dropped 44.3% in February, with visitors from China falling by 85.3%. With the Songkran festival—a tourist magnet—already postponed, Thailand could be set to lose as much as US$1.52 billion from tourism alone if the virus spread is not contained soon.
“We believe that the outbreak could be controlled by the end of March, which means April could be the lowest point for foreign tourist arrivals in Thailand,” Yutthasak Supasorn, governor of The Tourism Authority of Thailand, told media.
Containment and treatment
Thailand was the first place outside China to report a novel coronavirus case and was initially named as the highest-risk country for infection by the University of Southampton.
The situation was largely under control until recent weeks and the government appeared successful in minimising the spread of the virus without closing its borders to high-risk countries. This originally appeared to be a risky decision but is demonstrative of the Thai government’s desire to maintain its close economic relations with China and avoid further suffocating tourism revenue.
A surge in cases around mid-March has led to stricter measures being introduced. Prime Minister Prayut Chan-o-cha announced a state of emergency that will be in place from March 26 to April 30 at minimum, banning both foreign entry to the country and public gatherings.
Meanwhile, the newly built 100-bed Bang Khun Thian Hospital has been designated as one of the main hospitals for treating COVID-19 patients, while the Universal Coverage for Emergency Patients (UCEP) has announced that people infected with the virus will be able to seek treatment at the nearest hospital free of charge in the first 72 hours.
The army has also begun spraying the streets of Bangkok with disinfectant in an effort to minimise the risk of infection. They will carry out daily cleaning efforts from 1 am until 5 am every morning until the end of March.
The Thai government has also been proactive about safeguarding the economy however possible.
Just as the outbreak was taking hold in early February, the Thai Secretary of the Monetary Policy Committee (MPC) cut the policy rate by 0.25% from 1.25% to 1%. The government has also announced a 100 billion baht (US$3.2 billion) stimulus package to help the country’s economy weather the storm and eventually recover. This includes soft loans, a fund, and tax benefits for those affected.
This won’t undo the damage caused by the massive fall in tourist numbers but is further evidence that Thailand has been prepared from the beginning to withstand a crisis in ways that perhaps other economies aren’t.
Thailand’s heavy reliance on tourism revenue, particularly from China, was always going to spell trouble when coronavirus began to spread from Wuhan. However, Thailand’s financial woes are not unique: plunges in the stock market are happening in pretty much every country worldwide as the pandemic rages on.
For the time being, the priority is containing the virus. Investors are wisely holding on to their cash until more certainty can be established. But Thailand has proved forward-thinking and innovative in handling the somewhat inevitable economic fallout so far and its decision to keep its borders open to China may prove fruitful once the pandemic is over.
While economies that failed to prepare for the COVID-19 outbreak suffer more than they expected to, Thailand’s hands-on and realistic approach could see it rise from the ashes.