Central Bank Predicts Economic Fallout from Recent Earthquake
The Bank of Thailand has warned that the recent earthquake is likely to exacerbate the sluggish recovery in the property sector and impact foreign tourist arrivals to the country. The central bank’s preliminary assessment indicates that the disaster will have a ripple effect across three vital sectors: property, tourism, and domestic consumption, as highlighted by an official from the institution.
According to the central bank, the impact on property is expected to hinder rentals and sales of high-rise condominium projects, which were already grappling with a weak recovery and an oversupply of residential units. Concerns extend to the tourism sector, where media coverage of the earthquake may diminish foreign tourists’ confidence in visiting Thailand.
While some international travelers may postpone or cancel their trips, the central bank anticipates the number of cancellations to remain minimal due to the short-term nature of the shock. Historically, foreign visitors tend to return swiftly after similar incidents, although the timeline for recovery will hinge on the effectiveness of efforts to rebuild trust among tourists.
In addition, the earthquake is projected to affect domestic consumption, as impacted residents may focus on home repairs, which could lead to a decrease in overall spending. Nevertheless, financial assistance, insurance claims, and government support are expected to help alleviate some of the financial strain.
“It is premature to conduct a comprehensive assessment of the disaster’s economic impact. The Bank of Thailand requires extensive data, including direct economic losses and behavioral changes in households and businesses, to evaluate the overall situation,” the official stated.
Furthermore, the Bank of Thailand noted that the disaster has not substantially affected household incomes, and given its short-term nature, a significant adverse effect on earnings is not anticipated.
In a related update, the central bank recently reported that Thai economic activity slowed in February compared to the previous month. This downturn was particularly noticeable in the tourism sector, where both the volume of foreign tourists and their spending declined significantly.
For February, data indicated that the number of foreign visitors and their corresponding revenue plummeted by 13.9% month-on-month, while the tourist receipt index fell by 9.4%. This decline can be attributed to a drop in tourists from key markets, including China and Malaysia, following a post-Chinese New Year surge, coupled with safety concerns. Conversely, arrivals from other countries, such as Japan, India, and Russia, have shown positive growth.
On a different note, the seasonally adjusted value of merchandise exports (excluding gold) in February registered a month-on-month increase of 4.9%, driven by improved exports across various sectors, including a surge in shipments to the US ahead of imminent tariff measures.
