Thailand has Asia’s gloomiest economic forecast as tourism and exports hit hard by coronavirus

Gross domestic product is forecast to contract 8.1 per cent this year, according to the Bank of Thailand. That would be Thailand’s biggest ever decline

Efforts to promote domestic tourism won’t offset the tremendous losses to this critical industry, which last year made up about one-fifth of Thailand’s economy

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A pedestiran walks through Bangkok during peak hour. Photo: AFP

Published: 10:43am, 7 Jul 2020Updated: 1:01pm, 7 Jul 2020

Thailand has been cited as a success story in containing the coronavirus outbreak, having gone more than 40 days without any local transmission of Covid-19. Yet its economic outlook is the darkest in Asia.

Gross domestic product is forecast to contract 8.1 per cent this year, according to the Bank of Thailand. That’s worse than official forecasts for any of the main economies across Asia, and would be Thailand’s biggest GDP decline ever, surpassing even its plunge during the Asian financial crisis two decades ago.

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

Analysts surveyed predict Thailand’s economy will contract more than others in Southeast Asia, at 6 per cent, and with a weaker rebound in 2021 of 4 per cent.

The state of emergency, nighttime curfew and business closings imposed across the country to fight the virus have crushed private consumption and investment, which were already on a modest downtrend last year. Purchases are expected to pick up as the lockdown restrictions are lifted and as government stimulus measures filter through to the economy, but investors could be slow to return given the gloomy prospects.

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

Despite plans for travel bubbles with select countries, Thai authorities are proceeding to open the country slowly and carefully. Efforts to promote domestic tourism won’t offset the tremendous losses to this critical industry, which last year made up about one-fifth of Thailand’s economy.

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