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Covid vaccination price earlier than tourism reopens in November

Tourist sitting on a swing on a beach in Thailand.

© Marco Bottigelli | Moment | Getty Images

Next Monday, Thailand will lift quarantine restrictions on travelers from more than 40 countries who have been fully vaccinated – even though less than half of its population has been fully vaccinated. // Added mention of travelers who need to be “fully vaccinated”

According to Our World in Data, only about 42% of the Thai population had been fully vaccinated against Covid-19 by October 27. In comparison, other countries in the region such as Cambodia, Malaysia and Singapore have had more than 70% of their population fully vaccinated against Covid.

The three Southeast Asian nations plus Australia and China are on Thailand’s list of approved countries as the country prepares to reopen to tourists on November 1st.

After the Thai Prime Minister’s first announcement of the plan in early October, Bank of America economists said it was good news for Thailand’s tourism sector, economic recovery and currency – but stated it was “not without risk.”

As can be seen in the other countries, the vaccination rate, especially for the Delta variant, is far too low to prevent an outbreak.

“Despite an impressive and admirable vaccination effort, full vaccination remains relatively low and inconsistent,” said the economists. “As can be seen in the other countries, the vaccination rate, especially for the Delta variant, is far too low to prevent an outbreak.”

Still, they said a lockdown is unlikely, given the country’s high risk tolerance, unless the country’s ICU capacity is overwhelmed.

Due to the uneven vaccination rate across the country, the data available may not clearly reflect vaccination rates in places like the capital, Bangkok. The Bangkok Metropolitan Administration’s deputy governor recently told Singapore-based media company CNA that 75% of residents had already been vaccinated with the second dose.

The importance of tourism to Thailand

Among the economies in the region, Thailand is one of the most tourism-dependent economies, with the sector accounting for around 21% of GDP in 2019, according to Sian Fenner of Oxford Economics.

“Travel restrictions come with enormous economic and social costs and are a major reason Thailand’s economic recovery has lagged behind many of its competitors in the region,” said Fenner, chief Asian economist for the global consultancy.

… we do not expect domestic travel to fully recover to pre-Covid levels until 2025.

Sian Fenner

Senior Economist for Asia, Oxford Economics

“We believe that the government’s reopening of the borders, even though only about 40% of the population is fully vaccinated, reflects the country’s heavy reliance on foreign tourists,” said Charnon Boonnuch, an economist at Nomura.

According to the government, the Thai economy grew by 7.5% year-on-year in the second quarter. This level of growth lagged behind other regional economies such as Malaysia, Singapore and the Philippines, which grew between 11.8% and 16.1%.

Oxford Economics is forecasting GDP growth of 1.8% for Thailand this year for the full year, while Nomura is forecasting Thailand’s GDP growth of 0.6% in 2021.

International travelers are not expected to return immediately, however, as visitors may still face quarantine regulations in their home countries, according to economists.

“We expect incoming tourism to recover in 2022, but even then we still expect international arrivals to be around 66% below 2019 levels,” said Fenner. “In fact, we don’t expect domestic travel to fully recover to pre-Covid levels until 2025.”

Meanwhile, Bank of America economists highlighted that Chinese tourists – who made up about a quarter of Thai tourist arrivals in 2019 – are not expected to return until the latter half of 2022.

China has largely closed its borders to international travel since last year and continues to pursue a strict zero-covid strategy that has resulted in mass lockdowns, even with few infections reported.

Other parts of Southeast Asia are also looking to reopen their borders to international visitors, which, according to Nomura’s Boonnuch, has likely contributed to Thailand welcoming tourists again.

“The need to reopen has also increased due to increased competition from neighboring countries that have relaxed border rules, such as Singapore, which has a much higher full vaccination rate of 85%,” he said.

Singapore has announced vaccinated itinerary agreements with several countries including the US and UK, while Malaysia’s tourism minister told CNBC last week that the country could reopen its borders to international tourists in November.

Correction: This story has been updated to accurately reflect the Bank of America note came out in early October following the Prime Minister’s announcement.

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