Thailand now has Asia’s gloomiest economic outlook
Thailand’s GDP will shrink by 8.1 per cent this year, according to a forecast by the country’s central bank, making its tourism- and export-dependent economy the worst of main economies across Asia, Bloomberg News wrote. The rate of contraction will surpass even the plunge during the Asian financial crisis more than two decades ago, the report noted, indicating that the adverse effects on the not so well-off parts of the population could be huge.
The bad news come as the country keeps struggling with a collapse in tourism and weak exports. Thailand recorded no foreign tourist arrivals or receipts for a second straight month in May as the pandemic forced border closings. Annual tourist arrivals are forecast to drop to eight million, just one-fifth of last year’s total.
A ongoing state of emergency, nighttime curfew and business closings imposed across the country to fight the virus have crushed private consumption and investment, which were already on a modest downtrend last year. Purchases are expected to pick up slightly as the lockdown restrictions are getting gradually lifted and as government stimulus measures trickle through to the economy, but investors could be hesitant to return given the gloomy prospects.
Despite plans to open borders for select nations, Thai authorities are proceeding to open the country slowly and carefully. Analyst say that efforts to promote domestic tourism are not enough to offset the tremendous losses to this critical industry, which last year made up about one-fifth of Thailand’s economy, and unofficially probably up to 30 per cent.
Strong baht remains a considerable problem that will complicate a potential rebound
Another problem remains the strength of the country’s currency, which the Bank of Thailand was so far unable to rein in. The baht for no apparent reason has gained almost six per cent against the US dollar in the past three months, the second-best performer in Asia. Despite the central bank’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 which keeps hampering exports and will complicate the economic recovery in terms of foreign direct investments and tourism arrivals.
Low consumption is expected to continue to harm the economy, while unemployment has surged, particularly in the hospitality industry, in manufacturing and in services, while a considerable number of businesses and smaller shops in the cities closed down. While analysts are of the opinion that the country’s economy will start rebounding in 2021, the expected GDP regrowth of just about four per cent will be lower than in other main Asian economies.
Thailand' main international Suvarnabhumi Airport feels the heat of the lockdown Thailand’s GDP will shrink by 8.1 per cent this year, according to a forecast by the country’s central bank, making its tourism- and export-dependent economy the worst of main economies across Asia, Bloomberg News wrote. The rate of contraction will surpass even the plunge during the Asian financial crisis more than two decades ago, the report noted, indicating that the adverse effects on the not so well-off parts of the population could be huge. The bad news come as the country keeps struggling with a collapse in tourism and...
Thailand’s GDP will shrink by 8.1 per cent this year, according to a forecast by the country’s central bank, making its tourism- and export-dependent economy the worst of main economies across Asia, Bloomberg News wrote. The rate of contraction will surpass even the plunge during the Asian financial crisis more than two decades ago, the report noted, indicating that the adverse effects on the not so well-off parts of the population could be huge.
The bad news come as the country keeps struggling with a collapse in tourism and weak exports. Thailand recorded no foreign tourist arrivals or receipts for a second straight month in May as the pandemic forced border closings. Annual tourist arrivals are forecast to drop to eight million, just one-fifth of last year’s total.
A ongoing state of emergency, nighttime curfew and business closings imposed across the country to fight the virus have crushed private consumption and investment, which were already on a modest downtrend last year. Purchases are expected to pick up slightly as the lockdown restrictions are getting gradually lifted and as government stimulus measures trickle through to the economy, but investors could be hesitant to return given the gloomy prospects.
Despite plans to open borders for select nations, Thai authorities are proceeding to open the country slowly and carefully. Analyst say that efforts to promote domestic tourism are not enough to offset the tremendous losses to this critical industry, which last year made up about one-fifth of Thailand’s economy, and unofficially probably up to 30 per cent.
Strong baht remains a considerable problem that will complicate a potential rebound
Another problem remains the strength of the country’s currency, which the Bank of Thailand was so far unable to rein in. The baht for no apparent reason has gained almost six per cent against the US dollar in the past three months, the second-best performer in Asia. Despite the central bank’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 which keeps hampering exports and will complicate the economic recovery in terms of foreign direct investments and tourism arrivals.
Low consumption is expected to continue to harm the economy, while unemployment has surged, particularly in the hospitality industry, in manufacturing and in services, while a considerable number of businesses and smaller shops in the cities closed down. While analysts are of the opinion that the country’s economy will start rebounding in 2021, the expected GDP regrowth of just about four per cent will be lower than in other main Asian economies.
