Economy facing damage from China’s ban on group tours

Tourists queue for a fever secreening at Don Mueang airport in Bangkok on Saturday. (Photo by Apichart Jinakul)

The Thai economy faces fresh turbulence after China banned outbound group tours to try and limit the spread of the novel coronavirus that’s sickened thousands.

Chinese holidaymakers — many on group tours — spent almost $18 billion in Thailand last year, more than a quarter of all foreign tourism receipts, government data show. The industry as a whole contributes 21% to gross domestic product, according to the World Travel & Tourism Council.

Both tourism and exports were already under pressure from a surge in the baht. Disarray over the annual budget is another obstacle for growth. The government has rolled out more than $10 billion of stimulus steps in the past few months to cushion the economy, which the Bank of Thailand estimates expanded at the weakest pace in five years in 2019.

"The outbreak of coronavirus is a risk," Tim Leelahaphan, a Standard Chartered Bank economist in Bangkok, wrote in a note. "The strong Thai baht may also affect tourism growth. That is unlikely to help an already-slowing economy."

The new coronavirus originated in China, where dozens have died from the illness. A number of nations have diagnosed the infection in travelers from China. Cases in Thailand are rising but remain in the single digits.

China’s prohibition on outbound group tours takes effect Monday and may spell more pain for Thailand’s Tourism & Leisure equity index. The gauge slumped more than 6% last week, making it the third-worst performing industry group on the stock exchange.