The Bank of Thailand believes the earthquake will further slow the already sluggish recovery of the property sector and impact foreign tourist arrivals.
The central bank's initial assessment suggested that the tragic event would affect economic activities across three key sectors – property, tourism and domestic consumption – according to Sakkapop Panyanukul, assistant governor for the Bank of Thailand's monetary policy group.
"Given the disaster, the Bank of Thailand expects that rentals and purchases of high-rise condominium projects will slow down amid the already weak recovery of the property sector and the existing high supply of residential units," he said.
Regarding the tourism sector, Mr Sakkapop said media coverage of the earthquake could affect foreign tourists' confidence in travelling to Thailand.
The central bank expects some international travellers to delay or cancel their trips. However, the rate of cancellations and delays is expected to be minimal, in line with the short-term shock of the disaster, he said.
However, Mr Sakkapop noted that based on past disasters in Thailand, foreign travellers have generally returned within a short period. However, the speed of recovery will depend on how well all relevant parties work to restore tourist confidence.
Additionally, the disaster is expected to impact domestic consumption, as affected residents may prioritise repairing their homes, potentially leading to reduced overall spending.
However, insurance claims, government assistance measures, and aid from financial institutions are expected to help ease the burden.
"At this stage, it is too early to fully assess the economic impact of the disaster. The Bank of Thailand requires comprehensive data, including direct economic effects and behavioural responses from both businesses and households, to evaluate the overall impact," Mr Sakkapop said.
However, he noted that the disaster has not had a broad impact on household incomes. Given the short-term nature of the shock, the central bank does not anticipate a significant effect on household earnings.
In a related development, the central bank yesterday released economic data for February, which showed that Thai economic activity softened compared to the previous month. This decline was particularly evident in the service sector related to tourism, as both the number of foreign tourists and their spending decreased.
In February, the number of foreign tourists and their total revenue, after seasonal adjustment, declined by 13.9% month-on-month, while the tourist receipt index dropped by 9.4%, according to Pranee Sutthasri, senior director of the Bank of Thailand's macroeconomic department.
The drop in foreign tourist arrivals was primarily due to a decline in visitors from China and Malaysia following a surge during the Chinese New Year festival. Concerns over safety, particularly among Chinese tourists, also contributed to the decline. However, arrivals from other countries, including Japan, India and Russia, continued to increase.
Meanwhile, the seasonally adjusted value of merchandise exports (excluding gold) in February grew by 4.9% month-on-month. This growth was driven by increased exports in various sectors, partly due to accelerated shipments to the US ahead of the implementation of new tariff measures tomorrow.
