Thailand has been cited as one of the best in suppressing the Covid-19 virus outbreak, a report in The Bangkok Post today says the outlook for the nation’s economy is way from favourable, naming it the worst in Asia.
The Bank of Thailand predicts the country to have the bleakest economic future throughout other Asian countries. Such a drop would be even worse than the one experienced throughout the Asian financial crisis of 1997-1998. Kiatipong Ariyapruchya, a senior economist for Thailand at the World Bank, says much of it can be attributed to the plunge in worldwide tourism since the nation shut its borders within the early weeks of the COVID crisis.
“Thailand has large exposure as a tourism hub, close to 15% of GDP, and it also has a large exposure of the export-oriented sector. Hence the large shock to GDP.”
In the meantime, Bloomberg is predicting a contraction of 6% for Thailand’s economy, the worst in south-east Asia, with experts anticipating it to have a weak recovery of about 4% in 2021. Measures put in place to suppress the spread of the Covid-19 virus are being seen as a significant factor in the financial downturn. The forced shut down of companies, introduction of a nighttime curfew and state of emergency have had a devastating knock-down effect at a time when investment and consumption have been already on a downward trajectory in the last 12 months.
Aside from a limitation on international flights, most restrictions have now been lifted, together with the government introducing numerous stimulus packages to boost domestic tourism and the overall economy. Nevertheless, no amount of domestic travel could make up for the devastating loss to the nation’s tourism sector, which accounted for a fifth of the overall economy last year.
With airports still closed to virtually all international arrivals, foreign tourism is anticipated to plummet to one-fifth of last year’s figures, at just eight million. The Thai authorities continue to be mulling the introduction of travel bubbles with nations it deems secure from Covid-19, but it’s moving sluggishly forward, with the PM expressing concern over the danger of reintroducing the virus via arrivals from abroad.
Analysts are also saying they don’t foresee a rush of funding any time soon, given the grim predictions facing the nation. Exports appear to be recovering, however, having taken a brief hit in the course of the first two months of the year. The rise within the price of gold is providing a much-needed boost, however, exports overall are still feeling the effects of a decrease in demand, along with disruptions to the worldwide supply chain.
The robust baht stays an ongoing issue, with the US dollar shedding almost 6% against the baht over the past three months, regardless of a number of interest rate cuts by the Bank of Thailand to attempt to quell the enthusiasm for the Thai currency. The Central Bank has beforehand spoken about the unfavorable impact the Thai baht is having on exports and the overall economic system, warning that they are going to take steps to restrain the currency’s climb if needed.
SOURCE: Bangkok Post
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