1. Skip to content
  2. Skip to main menu
  3. Skip to more DW sites

Tourism pushes Thai economy forward

Ate Hoekstra
July 12, 2017

Thailand's attractiveness as a tourist destination remains evergreen as millions of tourists continue to flock to the Southeast Asian nation, providing much needed momentum to its economy. But challenges remain.

The Royal Palace in Bangkok, Thailand
Image: DW/S. Bandopadhyay

Close to the Grand Palace in Bangkok a group of Asian tourists steps out of a brightly colored tourist coach. Most of them wear blue hats, colorful t-shirts and sunglasses. With hasty steps they follow a man wearing a vintage pair of glasses. He unfolds an umbrella and raises it up in the air. Now the tourists know who to follow.  

It's a typical scene that reflects the enormous popularity of Thailand as a holiday destination. This year the country expects a record number of around 34 million tourists, 7 percent more than in 2016. For Thailand's struggling economy tourism plays an increasingly important role.

Komsan Suwannart has been working as a tour guide for 30 years. He mainly serves European and American tourists around the country, but it's the number of Chinese tourists that has increased most, he said. "We now welcome a lot of tourists from China. People come here because of the hospitality of the Thai people and their kindness, and because we have beautiful places to visit."

Limited impact

Still, the tourism boom is remarkable, given that Thailand has been bothered by political unrest on a large scale over the past twelve years.

There were mass protests and shootings in the center of Bangkok, there were bomb attacks at tourist hotspots and three years ago the military took power in a coup d'état.

Tragedy also hit Thailand last October, when the deeply loved King Bhumibol Adulyadej died. The passing away of the monarch, who reigned for 70 years, plunged the country into a state of deep mourning.

The subdued atmosphere hit consumption as the nation toned down celebrations and festivities as a mark of respect.

Yet, its impact on tourism is limited. Last year, Thailand welcomed over 32 million tourists, twice as much as seven years ago, according to statistics complied by the World Bank. This year, the Tourism Council of Thailand, an umbrella organization for Thai tour companies, estimates the number to be about 34.4 million tourists.

A bright spot

The Thai government calculates that tourism this year should generate revenues worth 1.78 trillion baht (around $50 billion). Last year, the sector earned Thailand $45.9 billion, representing over 10 percent of the Southeast Asian nation's GDP.

Richard Brouwer, who has been active in Thai tourism for over 25 years, sees several factors underpinning this success. One of them is that Thailand offers a wide variety of activities for tourism, Brouwer, the chief commercial officer of travel company Khiri Travel, told DW.

"What also helps is the good price and quality relationship as well as the fact that there are many more flights going to Thailand than to neighboring countries like Vietnam. Qatar Airways and Emirates both fly to Bangkok five times per day, and they also have direct flights to Phuket."

But tourism is one of the only few bright spots of the Thai economy. Last year, the economy grew just 3.2 percent, only half of the 6.5 percent growth recorded in 2012.

Experts say the current expansion is mainly driven by large public investments and tourism. If growth does not pick up the military, which seized power in 2014 vowing to kickstart the economy, risks losing the support of sections of the middle class and business community.

Much of the growth in junta-era Thailand now comes from tourism and state spending on large projects, many of which were delayed during the years of political chaos.

Struggling private sector

 In the past, the Thai economy was strongly driven by the manufacturing and export of vehicles, electronics and garment products. But these industries have seen a few difficult years.

Gundy Cahyadi, an economist at DBS Asian Insights, pins the blame for the struggling economy on the sclerotic private sector. "The private sector is three times as big as the public sector, but their contribution to GDP growth in the past five years has been pretty much equal," Cahyadi told DW.

That's why Thailand's economic growth is now more dependent on tourism. That is a risk, Cahyadi said. "Certainly, most emerging economies tend to have a main driver of growth. But it will be better to have several sectors to depend on, to dampen the impact of a crash in any particular sector."

Tourists stranded after budget holiday scam

Thai tourism, however, is expected to continue to grow, with Oxford Economics forecasting a robust expansion this year. Some critics wonder if Thailand is ready to facilitate such continuous growth.

Richard Brouwer believes it won't be a problem, as long as the government is ready to do more to educate people. "There are good tourist and hotel schools here, but these are very expensive and many poor Thais can't afford to go there. There lies an important task for the government."

Cahyadi said a strong tourism sector will have its benefits, for example when it comes to keeping the Thai currency stable. "But Thailand needs to get back to the manufacturing game if it wants to see stronger GDP potential in the long run."