The Thai economy is expected to go into a recession of at least 7-9 per cent in 2020, the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) said on Wednesday.
The new GDP projection was lowered from its previous estimate of 5-8 per cent, making it more in line with the Bank of Thailand (BOT)’s 8.1 per cent and the Ministry of Finance (MOF)’s 8.5 per cent contraction.
The Thailand Development Research Institute (TDRI), however, anticipate a far worse outlook as they predict a 10 per cent recession, which would force nearly 10 million people out of jobs as a result of the coronavirus outbreak and nationwide lockdown.
The JSCCIB’s prediction is based on the estimation that exports will contract by 12 per cent when compared to the previous estimate of 10 per cent.
This view coincides with BOT’s prediction of 10.3 per cent, MOF’s 11 per cent, and the Thai National Shippers’ Council’s projection of at least a 10 per cent contraction.
The BOT reported that for the first six months of 2020, export value decreased by 17.8 per cent, minus 29 per cent if excluding gold. Import value also contracted by 12.3 per cent in the first half.
The Ministry of Commerce said in July that export value has already dropped by 7.1 per cent down to US$114.34 billion during the first six months of 2020.
Kalin Sarasin, the chairperson of the Thai Chamber of Commerce, added that the Thai economy will continue to contract in the second half of the year.
This will be largely due to the slump in the global economy as the coronavirus outbreak is still ongoing with a resurgence of infections in many countries including China, Japan, Vietnam and Hong Kong.
“This means that it will be hard for trade and international travelling to quickly recover,” he said. “At the same time, the baht is also fluctuating and beginning to strengthening which will affect Thai exporters’ competitiveness.”
The International Monetary Fund (IMF) said in June that the global economy is projected to contract by 4.9 per cent in 2020.
They said that the pandemic has had a more negative impact on global economic activity in the first six months of the year than they anticipated.
The IMF also said that Thailand will see a dramatic drop in current accounts surplus in 2020, as well as Malaysia, because of the dependency on exports and tourism, according to its latest External Sector Report released on Tuesday.
Apart from external pressure, Kalin added that the Thai economy will be hampered by the lowered purchasing power of both households and businesses with increasing uncertainty within the job market.
“We are also missing an important driver from tourism that used to generate about 3 trillion baht but it is very little today so the government should extend its relief measures until the end of 2020,” he said.
Most of the government’s relief measures, including a loan payment holiday, for SMEs, are coming to an end in October.
For other recommendations, the JSCCIB said the government’s new economic team should:
1. Promote and develop wellness tourism
2. Create value-added for agricultural products
3. Provide more opportunities for SMEs, especially for targeted industries
4. Promote Thailand as a regional trade and investment hub