The Federation of Thai Tourism Association (Fetta) estimates that the country would lose about 2 million tourists with expected loss of Bt100 billion during April and May due to the ongoing political turbulence, and current flight disruption in Europe.
Public investment will expand only slightly next year as the Thai Kem Kaeng Program will just about compensate for the reduction in the government’s on-budget investment in 2010.
Fetta had warned before the Songkran festival that the tourism industry could suffer losses of about Bt50 billion because of the large number of cancellations.
It raised the damage estimate following the cancellation of flights from Europe because of the ash spewing out of the volcano in Iceland, along with the temporary closure of hotels in the capital.
The medium-term outlook is sobering, with growth expected at 3.5 percent in 2010 and likely remaining below potential for the next three years. Because the Thai economy is largely dependent on final demand in advanced economies, a return to pre-crisis rates of economic growth (a full recovery vs. a rebound to pre-crisis levels) will require a combination of (a recovery of demand from advanced economies and a rebalancing of the sources of growth to reduce Thailand’s dependence on demand from advanced economies. Neither process is likely to be swift. Recovery from a financial crisis is a lengthy process that involves the rebuilding of balance sheets, and the IMF estimates that half of the losses in the financial system in advanced economies are yet to be recognized.
Against the backdrop of a weakening US dollar and mounting trade surpluses, East Asian currencies and Thai baht have appreciated only modestly
Most of the infrastructure development in Thailand has been responsive to demand rather than forward-looking. Availability and accessibility appear to no longer be a challenge. The next step for Thailand is to put more emphasis on quality of service delivery, management, and sound regulation.