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Thailand's Economy Looking Bleak

7 Jul 2020

Though Thailand seems to have been effective in suppressing the Covid-19 virus, a story in The Bangkok Post today says the country's economic outlook is far from favorable, labeling it the worst in Asia. 

The Bank of Thailand forecasts are the most pessimistic in the economies of Asian nations. Such a decline will be much higher than the one experienced during the 1997-1998 Asian financial crisis. Senior economist for Thailand at the World Bank, Kiatipong Ariyapruchya says much of it can be attributed to the plunge in international tourism since the country shut down its borders in the early weeks of the Covid crisis. 


"Thailand is widely exposed as a tourist center, close to 15 per cent of GDP, and also has a strong export-oriented industry exposure. Hence the GDP's big shock. 


Meanwhile, for Thailand 's economy, the poorest in South East Asia, Bloomberg expects a recession of 6 per cent, with analysts predicting it to see a slow rebound of around 4 per cent in 2021. Measures implemented to suppress Covid-19 virus spread.

The global crisis is being used as a significant cause. The compulsory closure of enterprises, the implementation of a night-time curfew and the state of emergency had a crippling knock-down impact at a period when spending and demand had both been on a downward trend since last year. 

With the exception of a restriction on international flights, most restrictions have now been lifted, along with the government introducing various stimulus packages to boost domestic tourism and the economy at large. However, no amount of domestic travel will substitute for the devastating loss to tourism sector in the region, which accounted for a fifth of last year's overall economy. 


With airports now closed to almost all international visitors, the forecast is that global tourists would fall to one-fifth of last year's estimates, at only 8 million. The Thai government is also mulling the implementation of travel bubbles with countries that it deems free from Covid-19, although it is late, with the PM voicing worry about the possibility of reintroducing the virus by international arrivals. 


Analysts also say they will not anticipate an investment rush anytime soon, given the country's bleak predictions. However, exports seem to be recovering, having made a brief hit during the first two months of the year. The rise in the price of gold provides a much-needed boost, but overall exports continue to feel the effects of a fall in demand, in addition to disruptions to the global supply chain. 


The powerful baht remains a ongoing concern, with the US dollar falling almost 6 percent in the last 3 months against the baht, following the Bank of Thailand 's numerous interest rate cuts to seek to quench the appetite for the Thai currency. Previously, the Central Bank spoke about the negative effect the Thai baht has on exports and the economy as a whole, warning that if necessary, they will take steps to curb the currency's climb.

Source Thaiger