Thai Tourism Sees Sharp Drop as Strong Baht and Regional Unrest Dampen Visitor Confidence

Thailand is on the brink of its first annual decline in international tourist arrivals in a decade, outside of the pandemic, as multiple crises have shaken visitor confidence. As of December 28, the country had recorded 32.6 million foreign arrivals, a 7% drop compared to the same period last year.

The year began with a sharp drop in Chinese tourists, following the abduction of actor Wang Xing in Thailand and his later rescue in Myanmar. This was compounded by a series of regional events, including an earthquake in Myanmar, a border conflict with Cambodia, and a political crisis in Thailand that led to a new government.

The strengthening baht has also played a role, making Thailand less competitive than neighboring countries like Indonesia. The baht gained 8% against the dollar this year, while the rupiah dropped 4%.

Why Did This Happen?

Safety concerns and the appreciation of the Thai currency have emerged as the main factors driving the drop in tourist numbers. Thailand's tourism secretary-general, Adith Chairattananon, noted that these issues have significantly impacted this year's tourist arrivals.

Full-year international arrivals are expected to reach 32.8 million, generating around 1.5 trillion baht in revenue. This is a decline from the 35.5 million visitors and 1.67 trillion baht in revenue recorded in 2024.

The Thai tourism authority aims to attract 36.7 million visitors in 2026, with a focus on short-haul markets according to recent reports. However, this goal is contingent on several factors, including a rebound in Chinese tourist confidence and reduced regional tensions.

How Did Markets React?

The Thai economy expanded in November, supported by strong exports and investment, but private consumption dropped. Assistant Governor Chayawadee Chai-anant noted that consumption should rebound in December due to year-end spending.

The Bank of Thailand has taken steps to address the baht's strength, including imposing stricter scrutiny on capital inflows above $200,000. The central bank has intervened heavily to manage the currency's volatility, as the baht has surged 9% against the dollar this year.

What Are Analysts Watching Next?

Chinese tourist arrivals are a key focus for the Thai tourism sector. Thapanee Kiatphaibool, governor of the Tourism Authority of Thailand, stated that the country needs to attract 6.7 million Chinese visitors in 2026 to meet its goals.

China's role as a mediator in the Thailand-Cambodia border conflict could also influence regional stability and, in turn, tourism. Thai and Cambodian officials met with Chinese Foreign Minister Wang Yi in Yunnan, where they discussed a sustained ceasefire and regional stability according to reports.

The central bank has also launched a loan guarantee scheme to support small and medium-sized businesses, aiming to boost credit by 100 billion baht over the next one to two years.

The Thai economy is expected to grow 2.2% this year, and 1.5% in 2026, according to the central bank. These growth figures are below the 2.5% seen in 2024.

The Thai tourism authority is optimistic that visitor numbers could reach 38 million next year if Chinese arrivals reach 8 to 9 million and regional tensions are managed effectively according to analysis.