Thai economy could take up to three years to recover

Thailand’s economy, which has been hard-hit by the effects of the coronavirus crisis particularly on tourism and exports, will take two to three years to get back on its feet, a new research report by Krungthai Bank shows.

The report expects that the Thai economy would shrink by as much as 8.8 per cent this year, close to what happened during the Asian financial crisis in 1997 and 1998.

In 2021, Covid-19 would cause a severe contraction of a whopping 60per cent of the global economy, whose effects on the Thai economy could be severe as well, but the country was “in a better position than many other nations thanks to its monetary and financial discipline, adaptation and digitalisation in the private sector,” the report says.

It further points out that Covid-19 was boosting the health business and brought “accelerated technological development.” For instance, the report states that in April there were more than ten million PromptPay [a digital payment service by Thai banks] transactions a day, doubling last year’s transactions.

Strong baht remains a major problem

But things still look shaky. Just recently, analysts have determined that the outlook for the Thai economy was the worst in Asia, with a higher contraction this year than any other Asian nation and a weaker rebound in 2021.

The Thai government has laid out some economic support plans, but seems not to able to rein in the strong baht which from a macro-economic perspective looks way to overvalued. This is adverse to a recovery in both the tourism and export sectors.

Despite the Bank of Thailand’s three interest-rate cuts this year, which have brought the benchmark rate to a record low of 0.5 per cent, the currency remained strong towards other major world currencies.

However, even though things do not lock too well, the Thai economy won’t need a bailout from the International Monetary Fund, the governor of the Bank of Thailand, Veerathai Santipraphob said. According to him, the Thai economy was still “regarded as strong” and the country would be able to manage the risk of economic recession better than it did in 1997. He cited evidence of the country’s current account surplus, the very high level of international reserves and low level of foreign debt (all which have helped maintain the strength of the Thai baht, though).



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Thailand’s economy, which has been hard-hit by the effects of the coronavirus crisis particularly on tourism and exports, will take two to three years to get back on its feet, a new research report by Krungthai Bank shows. The report expects that the Thai economy would shrink by as much as 8.8 per cent this year, close to what happened during the Asian financial crisis in 1997 and 1998. In 2021, Covid-19 would cause a severe contraction of a whopping 60per cent of the global economy, whose effects on the Thai economy could be severe as well, but the country...

Thailand’s economy, which has been hard-hit by the effects of the coronavirus crisis particularly on tourism and exports, will take two to three years to get back on its feet, a new research report by Krungthai Bank shows.

The report expects that the Thai economy would shrink by as much as 8.8 per cent this year, close to what happened during the Asian financial crisis in 1997 and 1998.

In 2021, Covid-19 would cause a severe contraction of a whopping 60per cent of the global economy, whose effects on the Thai economy could be severe as well, but the country was “in a better position than many other nations thanks to its monetary and financial discipline, adaptation and digitalisation in the private sector,” the report says.

It further points out that Covid-19 was boosting the health business and brought “accelerated technological development.” For instance, the report states that in April there were more than ten million PromptPay [a digital payment service by Thai banks] transactions a day, doubling last year’s transactions.

Strong baht remains a major problem

But things still look shaky. Just recently, analysts have determined that the outlook for the Thai economy was the worst in Asia, with a higher contraction this year than any other Asian nation and a weaker rebound in 2021.

The Thai government has laid out some economic support plans, but seems not to able to rein in the strong baht which from a macro-economic perspective looks way to overvalued. This is adverse to a recovery in both the tourism and export sectors.

Despite the Bank of Thailand’s three interest-rate cuts this year, which have brought the benchmark rate to a record low of 0.5 per cent, the currency remained strong towards other major world currencies.

However, even though things do not lock too well, the Thai economy won’t need a bailout from the International Monetary Fund, the governor of the Bank of Thailand, Veerathai Santipraphob said. According to him, the Thai economy was still “regarded as strong” and the country would be able to manage the risk of economic recession better than it did in 1997. He cited evidence of the country’s current account surplus, the very high level of international reserves and low level of foreign debt (all which have helped maintain the strength of the Thai baht, though).



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

$
Personal Info

Donation Total: $10.00

 

 

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