Thailand suffered a rare drop in tourist arrivals in October as Chinese stayed away, keeping the country’s economic outlook cloudy.

Overall arrivals fell 0.5 percent from a year earlier, the first decline since early 2017, according to Tourism Ministry figures and data compiled by Bloomberg. Chinese visitors slid almost 20 percent, Permanent Secretary for Tourism Pongpanu Svetarundra said in a briefing Wednesday in Bangkok.

The decline is a risk for growth as Chinese are the top source of foreign receipts in the tourism industry, which on some estimates makes up about a fifth of the economy. At the same time, October exports data released Wednesday showed a rebound from a September tumble, providing some relief.

A tour boat accident off Phuket in July that killed dozens of Chinese holidaymakers has weighed on visitor growth after sparking safety worries and damaging Thailand’s image on the mainland. Since then, blame has also been placed on the strength of the baht and the slowdown in China’s economy, amid deepening trade tension with the U.S.

“The Chinese market has still not recovered, but I think this is due to internal factors like yuan depreciation,” said Ben Montgomery, head of international affairs at the Thai Hotels Association in Bangkok. “We’re heading into high season, and the occupancy rates aren’t bad, but it’s also not as busy as we expected.”

Source: ©2018 Bloomberg L.P.

Slowing Growth

The military government is seeking to woo tourists by rolling out steps such as temporary visa-free entry for more nationalities. Overall arrivals are expected to climb to almost 40 million in 2019, from about 38 million this year, according to the National Economic & Social Development Board.

The agency said Monday it expects the government to do all it can to win back Chinese tourists, after reporting the weakest Thai economic growth since 2016. Moderating exports, tourism, public expenditure and agriculture sector prices slowed the expansion to 3.3 percent last quarter.

On Tuesday, the Cabinet unveiled $1.7 billion worth of steps to support Southeast Asia’s second-largest economy, including welfare help for low-income households. Weaker growth is coming at a politically sensitive time as the junta prepares to hold long-delayed elections next year.

The tourism sector has a history of bouncing back from setbacks.

“We think the tourist numbers will recover later this year, boosted by the government’s efforts to win back confidence from Chinese tourists and tourism packages,” said Naris Sathapholdeja, an economist at TMB Bank Pcl in Bangkok.

©2018 Bloomberg L.P.

This article was written by Siraphob Thanthong-Knight and Suttinee Yuvejwattana from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Photo Credit: A group of Chinese tourists take a selfie next to the Reclining Buddha at Wat Pho in Bangkok, Thailand. Athit Perawongmetha / Reuters