Several major Thai banks have drastically reduced their GDP growth forecast for 2020 citing the coronavirus epidemic, drought and fiscal delays.

The coronavirus epidemic, the delayed fiscal budget and the ongoing drought are estimated to shave nearly 280 billion baht off GDP, taking economic growth down to a range of 1.7-2.1%, according to TMB Analytics.

TMB Analytics forecast foreign tourist arrivals of 38.7 million in 2020.

The research unit earlier predicted economic growth would come in at 2.7% this year.

Earlier, the Tourism Authority of Thailand predicted a fall of 2 million tourists from China, the biggest source of visitors, this year.

Last year, Thailand welcomed a record 39.8 million foreign tourists, with Chinese visitors at nearly 11 million. Spending by foreign tourists accounted for 11% of GDP last year.

Siam Commercial Bank’s Economic Intelligence Center (EIC) has offered the most pessimistic view yet of Thailand’s 2020 economic growth, slashing its forecast from 2.7% to 2.1% after taking into account the coronavirus epidemic and the delayed fiscal budget.

The biggest impact from the outbreak of the novel coronavirus on Thailand’s tourism sector will be seen this month and next, the research unit said.    

The number of foreign travellers is estimated to drop for three straight months in the better-case scenario, four in the base-case scenario and six in the worst-case assumption, resulting in a contraction of 2.5%, 4.6% or 8.1% in 2020, the EIC said.

Growth may be less than 2%, says Bank of Thailand

The economy may grow by less than 2% this year while exports are likely to contract, mainly from the impact of the coronavirus outbreak, a senior central bank official said on Thursday to the Bangkok Post.

On February 6, citing coronavirus outbreak, delayed fiscal budget and severe drought conditions, the Bank of Thailand cut its policy rate by 25 basis points to 1%.

According to the MPC official statement, Thai economy growth would be lower than its previous forecast, due mainly to the new coronavirus outbreak, delay of the 2020 fiscal budget disbursement and drought.

Earlier this week the Thai Cabinet approved the Ministry of Finance’s proposal to introduce monetary and tax-related assistance policies to mitigate the side effects of the 2019 novel coronavirus outbreak in China, that has caused a tremor in global public health and the world economy.

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