Thailand has been successful in stemming the tide of COVID-19 infections over the last three months, but the economy is expected to shrink significantly in 2020.
The recovery will be gradual, as the economy may take more than two years to return to pre-COVID-19 output levels and will depend on an effective policy response, in particular support for vulnerable households and firms.
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.
The COVID-19 pandemic shocked the economy especially in the second quarter of 2020 and has already led to widespread job losses, affecting middle-class households and the poor alike.
While Thailand has been successful in stemming the tide of COVID-19 infections over the last three months, the economic impact has been severe. The tourism sector, which makes up close to 15 percent of Thailand’s GDP, has been hit hard, with a near cessation of international tourist arrivals since March 2020.
Exports to decline by 6.3 percent in 2020
Exports are expected to decline by 6.3 percent in 2020, the sharpest quarterly contraction in five years, as demand for Thai goods abroad remains weakened by the global slowdown. Household consumption is projected to decline by 3.2 percent as movement restrictions and dwindling incomes limit consumer spending, especially in the second quarter of 2020.
As Thailand starts to ease mobility restrictions, domestic consumption, Thailand’s traditionally strongest driver of growth, may pick up in the second half of 2020 and in 2021, but economic recovery will be gradual and uncertain.
In the baseline, the Thai economy is projected to grow by 4.1 percent in 2021 and by 3.6 percent in 2022, which represents a slow recovery to pre-COVID GDP output levels by mid-2022.
The shape of the recovery is subject to considerable downside risks, including weaker global growth, feeble tourism, and continuing trade and supply chain disruptions.
Thailand relaxes COVID-19 measures to help revive economy
During the past couple weeks, new infection cases have been down from roughly 20,000 daily cases to 17,000 -19,000. Moreover, the number of daily discharges is exceeding infections, which has led to the conclusion that the situation is improving.
Thailand relaxed more virus related social curbs on September 1st, in dozens of cities including Bangkok, in a move that may indicate that the country’s economy, hit hard by COVID-19 will soon revive, lead by the export sector and sound financial fundamentals.(more…)
Southeast Asia to relinquish its lead over Latin America says Moody’s
While the emerging economies of Southeast Asia have outperformed their counterparts in Latin America for most of the past two decades, their lead will slide in the next few quarters as Southeast Asian governments clamp down to fight the pandemic’s lingering second and third waves.
The Delta surge is casting larger clouds over the global recovery and emerging markets are in the thick of it. Despite the ebbing of the coronavirus variant in India, where it first emerged, its spread in Southeast Asia, Africa, and the Middle East has steepened the road to recovery in these regions.(more…)
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