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Thailand faces two-year recovery path to pre-pandemic levels

Thailand’s economy could take as long as two years to return to pre-pandemic levels, according to Bank of Thailand and World Bank forecasts.

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Tourists at Suvarnabhumi airport
Tourists are checking domestic flights in an empty Bangkok Suvarnabhumi airport

Thailand’s economy could take at least two years to return to pre-pandemic output, said World Bank economist Arvind Nair yesterday.

Thailand was among the worst-hit economies in the region, Mr Nair said, because trade and international tourism, two of the biggest contributors to its GDP, were hit particularly hard by the crisis.

Thailand’s economy is expected to be impacted severely by the COVID-19 pandemic, shrinking by at least 5 percent in 2020 and taking more than two years to return to pre-COVID-19 GDP output levels, according to the World Bank’s latest Thailand Economic Monitor.

An estimated 8.3 million workers will lose employment or income by the COVID-19 crisis, which has put many jobs, in particular those related to tourism and services, at risk.

“Thailand has large exposure as a tourism hub, close to 15% of GDP, and it also has a large exposure to the export-oriented sector,” said Kiatipong Ariyapruchya, senior economist for Thailand at the World Bank.

BoT predicts two-year recovery path

Thailand’s economy is expected to take two years to fully recuperate, also stated Bank of Thailand governor yesterday.

The central bank has revised down Thailand’s GDP for this year to an 8.1% contraction from a 5.3% decline projected previously.

The central bank, however, raised its forecast for Thai economic growth next year to 5% from the 3% predicted in March.

An 8.1% GDP contraction is the worst official forecast for any of the main economies across Asia and would be the country’s biggest GDP decline ever, surpassing even the plunge during the Asian financial crisis over two decades ago, according to Bloomberg.

Thailand recorded no foreign tourist arrivals or receipts for a third straight month in June as the pandemic forced border closures. Annual tourist arrivals are forecast to drop to 8 million, just one-fifth of last year’s total.

Last week, the Civil Aviation Authority of Thailand (CAAT) cited the possibility of extending the international flight ban, due to concerns over the global COVID-19 situation.

The director-general of the CAAT said the recovery of Thailand’s airline industry, which is expected to be revived by the travel bubble programme by August, may be delayed as travel bubble program partners including China, Japan and South Korea have recently faced a recurrence of their coronavirus outbreak.

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Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

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Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

What measures has SET taken to support listed companies’ compliance with ESG standards?
PAKORN PEETATHAWATCHAI:

PAKORN: When we first began promoting ESG-compliant investments, we were met with little interest. We attributed this to a lack of clear data to showcase the economic benefits of ESG investment, and perhaps limited clarity as to what constitutes a sustainable or ESG-compliant investment. The launch of the THSI list and, subsequently, the SETTHSI Index, was designed to address this. Our most recent data, comparing returns for the SETTHSI Index with the broader SET and SET100 indices from April 2020 to April 2021, underscores the economic benefits of these investments: the group compliant with ESG standards outperformed the other two indices on every data point. 

As of May 2021 Thailand was home to CG and ESG assets under management totalling BT54.8bn ($1.7bn) across 50 funds – up from 23 funds in 2019. Meanwhile, of the BT187.1bn ($5.9bn) raised in green, social and sustainability bonds since 2018, BT136.4bn ($4.3bn) was raised in 2020 – 83% from the government and the remainder from development banks and private players. This rising demand, in a move to manage risk and generate returns, has been complemented by growing supply and promotion: supply from ESG-compliant businesses aiming for resiliency and sustainable growth, as well as promotion from regulators highlighting investment opportunities with good CG and SD practices. Indeed, the pandemic has been a catalyst in shifting the view of ESG compliance from a luxury to a requirement in the new normal.

In what ways can enhanced standard-setting and regulatory mechanisms overcome the remaining barriers to improved ESG performance?

PAKORN: A multi-stakeholder approach is crucial for enhanced ESG performance – not only in Thailand, but around much of the globe. This can also help to address the standout incumbent challenge: access to reliable, wide-ranging ESG data. For example, the 2020 update to the 56-1 One Report established clear ESG standards and triggered online and offline capacity-building programmes to support listed firms’ compliance. SET is developing an ESG data platform with a structured template to promote the availability of comparable data, maximise value added from corporate sustainability disclosures, and foster collaboration between the business value chain and stakeholders. This is expected to support Thai companies along their ESG journey in an economically sustainable way, result in a greater number of sustainability-focused products and services, drive sustainable investing in the Thai investment community and ultimately “make the capital market work for everyone”, as outlined in the SET’s vision.
 

 

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Economics

Youth unemployment hits new highs in Thailand due to COVID-19 restrictions

BANGKOK, Thailand (ILO news) – Joblessness among young men and women in Thailand has reached a level unseen in recent years due to the impact of the COVID-19 pandemic, according to a new brief from the International Labour Organization (ILO).

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Coronavirus disease 2019 (COVID-19) WHO Thailand Situation Report - 22 February 2021

The Thailand labour market update  found that youth employment fell by 7 per cent in the first quarter of 2021 (from the fourth quarter 2019). The youth unemployment rate increased by 3 percentage points for both men and women, reaching a high of 6 per cent and 8 per cent, respectively.

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