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Thai economy shrinks, pandemic to blame

Caitlin Ashworth

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Thai economy shrinks, pandemic to blame | The Thaiger
PHOTO: Thailand Public Relations Department
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The Thai economy is shrinking. A lot. So much that it’s close to hitting as low as it did in the 1998 financial crisis. Some say the coronavirus pandemic is to blame.

For the second quarter, the Thai economy shrank by 12.2%, the National Economic Social Development Council says. That’s just a few decimal points away from a low in the financial crisis, according to the council’s secretary general Thosaporn Sirisumphand.

“It is the most severe contraction since the second quarter of the 1998 Asian financial crisis, when GDP had sunk by 12.5%.”

The Nation reports the coronavirus pandemic had a huge impact on the drop in GDP in Thailand as well as many countries around the world. They say China and Vietnam are the few that experienced growth.

The Thai economy is expected to shrink by 7.5% for the full year, but that’s if there’s not a second wave of the coronavirus, the Nation says. Sirisumphand says the economy has improved with the recent reopening of businesses.

While a second outbreak is a potential threat to the economy, Thailand’s domestic political protests and the trade war between the United States and China could also impact the Thai economy.

“Should the country face political turmoil, it would worsen the economic downturn.”

Siriumphand warns that many could lose their jobs if the economy does not improve. The Nation says the unemployment rate rose 1.95% in the second quarter with 745,000 people unemployed. Many are looking for jobs. Just earlier this week, thousands of job seekers crowded Bangkok hotel to file an application.

“Should the economy not get better, then 1.76 million workers would be laid off, but if the economy improves, they will be able to keep their jobs.”

SOURCE: Nation Thailand

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8 Comments

8 Comments

  1. Avatar

    rinky stingpiece

    August 18, 2020 at 1:31 pm

    They best start making some trade deals with major economies around the world to export products and import skills, training, capacity building and investment. Scrap the layers of pointless bureaucracy that ultimately constrains the country from growing.

  2. Avatar

    harry1

    August 18, 2020 at 2:33 pm

    what with the strong baht damaging exports,tourist revenue now decimated and the faithful longterm stayer gone,and no insight when this virus will be contained worldwide.the powers that be need to open up its residential market for oversea investor and allow freehold ownership with residency rights.there are 100 of thousand of long termers looking to buy abroad especially in a virus free country.until this becomes a reality thailand can be waiting for years for the return of tourism

    • Avatar

      gabby

      August 19, 2020 at 4:01 am

      I agree with harry1. The strong Thai Baht is definitely damaging exports as well as the tourist industry. It is also jeopardizing foreigner’s real estate investment. Many foreigners have already bought condos in various parts of Thailand. They would love to stay for longer periods at a time and spend their hard earned money in the country. There are an enormous number of projects presently being built nationwide. These condos and luxury real estate projects are aimed at buyers who would like to spend more than just a month or two in Thailand. The visa restriction should be eased for long termers who already own real estate in Thailand and those who are planning to buy in the future. It’s money out the window if the authorities do not pay proper attention to long termers.

  3. Avatar

    Bobby m

    August 18, 2020 at 6:09 pm

    I think (pandemic partly to blame) would be a more accurate statement.

  4. Avatar

    Mike Frenchie

    August 18, 2020 at 10:27 pm

    What about an overreaction of the government closing down a country for a disease non lethal for most people (below 60 and without pre-conditions)? Sweden has got the correct reaction…

  5. Avatar

    gabby

    August 19, 2020 at 3:57 am

    I agree with harry1. The strong Thai Baht is definitely damaging exports as well as the tourist industry. It is also jeopardizing foreigner’s real estate investment. Many foreigners have already bought condos in various parts of Thailand. They would love to stay for longer periods at a time and spend their hard earned money in the country. There are an enormous number of projects presently being built nationwide. These condos and luxury real estate projects are aimed at buyers who would like to spend more than just a month or two in Thailand. The visa restriction should be eased for long termers who already own real estate in Thailand and those who are planning to buy in the future. It’s money out the window if the authorities do not pay proper attention to long termers.

  6. Avatar

    Davidnicholls

    August 19, 2020 at 4:33 pm

    If Thailand does not open by Christmas it will be finished as people will travel to other countries it’s sad but true thai people will suffer not the government

  7. Avatar

    james

    August 19, 2020 at 9:30 pm

    Shrank by 12.2%?

    So no different to most other economies in the world then.

    I see the ex-pats are at it again with their comments sounding more important than they are, I doubt the few hundred thousand of them who are here contribute much to the economy, it is the 30 million tourists per year who spend 5000 baht a day who contribute 17% to the Thai economy, not the ex-pats scraping along on their low pensions and rented condos.

    Once tourism bounces back then the 12.2% loss will be gone.

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Caitlin Ashworth is a writer from the United States who has lived in Thailand since 2018. She graduated from the University of South Florida St. Petersburg with a bachelor’s degree in journalism and media studies in 2016. She was a reporter for the Daily Hampshire Gazette In Massachusetts. She also interned at the Richmond Times-Dispatch in Virginia and Sarasota Herald-Tribune in Florida.

Economy

Vietnam’s booming manufacturing sector reduced to a trickle as world pandemic kills demand

The Thaiger

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Vietnam’s booming manufacturing sector reduced to a trickle as world pandemic kills demand | The Thaiger

Vietnamese finance officials are downgrading expectations for a recovery of the south east Asian nation’s economy in 2021. The normally fast-growing gross domestic product in 2020 has stalled due to a huge drop in local and global demand, and the absence of international tourism. The booming economy, growing at an average of 6% per year since 2012, will struggle to reach a growth rate of 2% this year.

Fuelled by manufactured exports, the Vietnam economy has dropped back to a trickle. The Asian Development Bank estimates that this year’s GDP growth could be as low as 1.8%. The Vietnamese factories, that usually crank out shoes, garments, furniture and cheap electronics, are seeing dropping demand as the world’s consumer confidence drops dramatically.

Stay-at-home rules in Europe and America are keeping are keeping people away from retail stores. And despite the acceleration of online retail, many of the consumers are emerging from the Covid Spring and Summer with vastly reduced spending power.

The headaches of 2020 are also challenging Vietnam to maintain its reputation as south east Asia’s manufacturing hotspot. Rising costs and xenophobic foreign policy have put China ‘on the nose’ with some governments, complicating factory work in China, whilst other south east Asian countries lack infrastructure and are incurring higher wage costs.

One Vietnamese factory operated by Taiwan-based Pou Chen Group, which produces footwear for top international brands, has laid off 150 workers earlier this year. There are hundreds more examples of the impact of falling demand in the bustling Vietnamese manufacturing economy.

Vietnam’s border closure is also preventing investors from making trips, setting up meetings and pushing projects forward. Those projects in turn create jobs, fostering Vietnam’s growing middle class. Tourism has also been badly affected by the restrictions on travel. “International tourism is dead,” says Jack Nguyen, a partner at Mazars in Ho Chi Minh City.

“Inbound tourism usually makes up 6% of the economy.”

“Things will only pick up only when the borders are open and there’s no quarantine requirements. Who knows when that’s going to be.”

A mid-year COVID-19 outbreak in the coastal resort city Danang followed by the start of the school year has reduced domestic travel, analysts say. Some of the country’s hotels are up for sale as a result.

“Recovery could take 4 years.”

The Vietnamese Ministry of Planning and Investment is now warning that global post-pandemic recovery could take as long as 4 years, perhaps more.

Not that foreign investors in the country are pulling out. Indeed, many are tainge a long-term view that Vietnam’s underlying strengths will outlive Covid-19. Vietnam reports just 1,069 coronavirus cases overall.

SOURCE: VOA News

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Thailand

Government to stir economy with 100 billion baht stimulus starting in October

The Thaiger & The Nation

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Government to stir economy with 100 billion baht stimulus starting in October | The Thaiger

The Thai Government is expected to stimulate the economy with 100 billion baht boost starting in October until the end of the year. The injection will reportedly come from both the people’s and the government’s spending under three stimulus measures according to the Deputy PM Supattanapong Punmeechaow.

The first measure will reportedly give 14 million welfare cardholders an extra 500 baht discount over the next 3 months on their shopping with the budget for this measure totalling 21 billion baht. The second measure, dubbed “Kon La Khreung” or Let’s Go Halves, will give 10 million people up to 100 baht discounts daily on beverages and household essentials with the subsidy being capped at 3,000 baht per person. The scheme will not, however, include such things as alcohol, tobacco or lottery tickets.

The third measure is aimed at wealthier Thais as tax incentives and will be offered in an effort to encourage them to spend more as consumers. The Cabinet has also approved a measure to pay 260,000 new graduates half of their salary to help the private sector. That budget is reportedly totaling 19.5 billion baht.

Supattanapong also predicts the economy will improve next year but warns it could take 2 years before the nation’s economic growth returns to the pre-Covid level. He says the country’s current budget is sufficient to boost the economy unless there is a second wave of Covid.

“But in the event that there is a second wave, the government is prepared to borrow more as its national debt is quite low compared to other countries. However the government is being cautious so it can remain financially healthy in the post-Covid era.”

SOURCE: Nation Thailand

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Economy

Deputy PM says 2 years until Thailand’s economy is back to normal

Caitlin Ashworth

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Deputy PM says 2 years until Thailand’s economy is back to normal | The Thaiger
PHOTO: MGR Online

It’s going to be another 2 years until Thailand’s economy is back on track, according to Deputy PM Supattanapong Punmeechaow. At least that’s the amount of time he expects it will take to get the economy back to “normal levels” from before the coronavirus pandemic.

The coronavirus crisis crippled economies across the globe. The Covid-19 pandemic is already the worst global crisis since World War II, according to a report by the UN. Thailand’s tourism-dependant economy has been struggling since the country shut it’s doors to international travel. Krungthai Bank also predicts it will take about 2 to 3 years for Thailand’s economy to recover and the Finance Ministry predicts Thailand’s economy will contract by a record of 8.5% this year.

Almost 800 billion baht has gone into supporting the economy, Supattanapong says, adding that the government plans to do more stimulus perks to help boost the economy. The government is working on a 1.9 trillion baht response package with a 1 trillion baht borrowing plan.

Supattanapong’s guesses are based on the pandemic situation not getting any worse, whilst the world’s Covid cases, in many part of the world, including many of Thailand’s feeder markets, are suffering a new spike in cases. His assumptions would also have to include an immediate return to high profit of the country’s tourism industry – not likely to happen any time soon.

“I think the economy should get back to normal levels within two years… But if we can manage it very well, we may see that late next year.”

While Thailand’s economy as a whole might take just 2 years to get back to normal, the country’s tourism revenue is expected to take even longer. Krungthai COMPASS Research Centre predicts it will be at least 3 to 4 years until tourism revenue is back to normal. Thailand’s tourism revenue is expected to shrink by 70% by the end of this year, making only 9.1 billion baht compared to the 3.02 trillion baht tourism brought in last year.

SOURCE: Bangkok Post

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