Thai July economy improves but foreign tourist ban a big drag

BANGKOK (Reuters) – Thailand’s economy improved in July, helped by public spending and an easing of coronavirus containment measures, but tourism suffered from a continued border closure, the central bank said on Monday.

July’s private consumption rose 2.7% from June as activity resumed, while annual exports shrank at a smaller pace of 11.9%.

“Looking forward, there are still high uncertainties,” Don Nakornthab, a director at the Bank of Thailand (BOT), told a briefing.

Most uncertain are foreign tourist numbers, which could miss the central bank’s projection of 8 million, he said.

Thailand could at best have 6.7 million foreign visitors this year, as projected by the state planning agency and the finance ministry, meaning 1.3 million fewer tourists than the BOT’s forecast, affecting GDP by 0.5%, he said.

BOT Governor Veerathai Santiprabhob told Reuters on Friday the BOT’s forecast for a record 8.1% economic contraction this year could be “optimistic”. The BOT will review that next month.

The tourism-reliant country received 6.69 million international tourists in January-March but the influx ended on April 4 when Thailand imposed a ban on foreign vacationers to keep the coronavirus out.

That compares with last year’s record 39.8 million visitors whose spending made up about 11.4% of GDP.

From October, Thailand will allow foreign tourists on the island of Phuket for long stays, with a quarantine.

In July, Thailand had a current account surplus of $1.79 billion after a trade surplus hit a five-month high of $4.11 billion, driven by higher gold exports.

The central bank has said gold shipments add upward pressure on the baht. THB=TH. Veerathai said the BOT should “very soon” relax rules on foreign currency deposits “to make sure that gold trading will not have an unnecessary impact on exchange rates”.

“The use of foreign currency deposits in gold trading in U.S. dollars is one example,” he said, adding Thais could also keep savings in foreign currency deposits.

Reporting and photo: Reuters

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