Thailand’s ‘Phuket Sandbox’ is coming at an opportune time with the country’s economy struggling under the effects of the pandemic. But analysts warn that the sandbox is unlikely to be a fix-all when it comes to the economy.
Thailand’s economy in May worsened from the third wave of the Covid-19 epidemic with the household debt to GDP reaching an all-time high of 90.5 per cent in the first quarter, said the Bank of Thailand this week.
“Private consumption and private investment continue to decline from the previous month while the tourism sector has not recovered,” said Chayawadee Chai-Anant, Senior Director at the Economic and Policy Department.
Economic activities, household income, and consumer confidence deteriorated in spite of the government’s stimulus measures.
Chayawadee said the labour market remained vulnerable, especially the self-employed group who were concerned about their financial condition.
Employees in several business areas have also seen a decrease in pay and work hours, she added.
Foreign arrivals in May stayed low as a travel ban remained in place. According to the report, Thailand only saw about 34,800 visitors in the first five months this year, while the latest projection of tourists from the central bank stood at 700,000 for the entire year.
Thailand hopes to change that with the opening of the sandbox model in Phuket which would be applied to other tourist hot spots.
But analysts warn that the sandbox model was unlikely to see the return of tourist numbers to pre-covid numbers.
“The restrictions in place and the number of infections rising again means that there will not be any mass influx from this model,” said analyst Arun Saronchai. “This is not a quick fix for the country’s economic woes and the hard road to recovery is a vaccinated one.”
For the first quarter of 2021, the country’s household debt ratio to gross domestic product (GDP) rose to 90.5 per cent or 14.1 trillion baht, rising from the 89.4-per-cent of GDP at the end of 2020.
The household debt ratio has hit the highest record since 2003 and this still does not include the impact from the current wave of the pandemic.
The central bank is assessing the economic damage from the semi-lockdown order in Bangkok and high-risk areas for 30 days, warning that the GDP might be further reduced from the current 1.8-per-cent growth.
Earlier, an analyst has predicted that the lockdown will cost the Thai economy 140 billion baht, or up to 1.6 per cent of the annual GDP.