Tourism numbers expected to see significant jump
The Fiscal Policy Office (FPO) has forecast a significant jump in the number of foreign tourists expected to visit Thailand this year, a recovery which is set to offset the significant drop experienced last year.
In 2014, tourist numbers came in at 24.8 million, which was a drop of 6.77 percent year on year. Based on figures of foreign visitors arriving via both Suvarnabhumi and Don Muang international airports in Bangkok in the early part of this year, the FPO expects tourist arrivals to rise strongly, and possibly match the figures set by the Tourism Authority of Thailand (TAT) which has forecast arrivals to hit 29 million this year. The TAT suggests this number would help push tourism revenue to 2.2 trillion baht.
Tourism revenue has been a major source of income for Thailand for some decades now and currently accounts for between nine and 10 percent of GDP. The government has decided it needs to help maintain and boost the tourism sector since export remain tepid and domestic consumption is also weak.
Despite the optimism, the eventual numbers cannot be guaranteed and even the estimates are only based on figures available from the first months of this year, and these are incomplete. For example, while both Suvarnabhumi (at 11.7 percent year-on-year) and Don Muang (at 51.2 percent year-on-year) saw surges in foreign visitor arrivals, numbers dropped at Phuket international airport in January, dropping by four percent year on year. That drop was blamed on the fall in the Russian ruble, with Russian tourists now making up a significant swathe of tourists into Phuket.
The FPO noted that income from Value Added Tax (VAT) rose at an annualized rate of 9.5 percent in January. Nonetheless, VAT on imported goods actually dropped by a whopping 17.1 percent in the same month, thereby making gross VAT income contract by two percent year-on-year.
Elsewhere, the FPO noted that tax from real estate transactions had risen by 15.6 percent in December 2014 and by a further 16.2 percent in January. While this was a good sign, the reality is that much of the activity was prompted by property ownership transfers being undertaken ahead of expected inheritance and land and buildings taxes.
Another indicator of private investment, cement sales, contracted in January by 5.8 percent, after a small growth in December.
The FPO notes that public sector investment is almost certainly going to be the key driver of economic growth this fiscal year with the government setting a budget of 450 billion baht, or 17.5 percent of yearly expenditure, to provide this drive.
