Business closures up 38%, pandemic ‘scarring’ the economy
“The pandemic is scarring the economy, especially with the business closures and unemployment.”
The coronavirus pandemic has led to a spike in business closures in Thailand, increasing nearly 40% since last year, and those numbers are expected to continue to go up. Many of those businesses were in the tourism industry, a sector that has been crippled by the halt of international travel. With business closures, many lost their jobs, leading to the highest unemployment rate in the past 10 years.
From June to July, business closures went up by 38.4% compared to numbers the same time last year, according to the Economic Intelligence Centre. The EIC, which is a research house under Siam Commercial Bank, says they expect higher numbers in the 2nd half of the year due to the economic decline brought on by the pandemic. As of mid-August, 13,400 businesses had closed. The ratio of business closures increased by 37.9% year on year for the first 18 days of August, according to EIC.
Business closures grew an average of 38% for 2 and a half months and the number is expected to continue to grow for the second half of the year, according to first executive vice-president of EICYunyong Thaicharoen.
“We cannot predict the rate of business closures later this year because it requires analysis with updated data, but the rate is expected to be a double-digit increase.”
Hotels and other tourism businesses made up many of the closures, but Yunyong says many textile and automotive companies also closed down. With the business closures, many lost their jobs. The unemployment numbers had a nearly double digit increase during the second quarter in comparison with last year’s period. EIC says 745,000 workers in Thailand were reported as unemployed.
“The pandemic is scarring the economy, especially with the business closures and unemployment. With a vulnerable labour market, underemployed and furloughed workers could reach 3 to 5 million in the coming period.”
Meanwhile, Thailand’s unemployment rate hit a record high. In Q2, unemployment increased to 1.95%, the highest it has been since 2009, the EIC says (Thailand has historically recorded a very low unemployment rate).
Most unemployed people are people are in the 15 – 24 old demographic, many of them being graduates, according to Yunyong. The youth unemployment rate in the second quarter was 8.6%.
The highest unemployment rate is at hotels and restaurants with 2.9%. Construction followed with 2.8% and then electronics businesses at 2%. There are 84,000 people unemployed in hospitality and restaurant business in the second quarter. Other service businesses reported 91,000 people unemployed.
While some people lost their jobs during the pandemic, many people faced lower work hours. The EIC says weekly hours went from 40.7 hours, reported in the first quarter, to 38.1 hours on average in the second quarter. At the end of 2019, the average work hours were reported at 42.7 hours.
SOURCES: Bangkok Post | Chiang Rai Times
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