As the COVID-19 pandemic spreads across the globe, many have been speculating the potential economic implications on different countries. Being troubled by its internal factors, Thailand’s economy has been slowing down and appeared to be stagnant prior to the emergence of the novel coronavirus. This is potentially attributable by the long-lasting political unrest which led to a coup in 2014 and several large firms dominating the economy, which led to lack of innovation and competition driving the economy growth.
In 2019, it merely grew by 2.4%, representing its weakest pace in 5 years. The Thai economy has been severely impacted by the strong Thai Baht and recent US-China trade war, as it is strongly dependent on exports. Throughout the last decade, the economic growth of has not been too appealing either. The country’s growth rate from 2009 to 2019 is around 3.6% on average, lagging behind its neighbouring countries namely Vietnam, Philippines and Malaysia that registered an average growth of 6.5%, 6.3% and 5.3% respectively.
On March 25th, Thailand’s Prime Minister Prayut-Chan-o-cha has declared a state of emergency in Thailand in efforts to contain the virus outbreak that would last until the end of April. While the country is already experiencing one of its worst drought in possibly 4 decades, the Thai economy is on the verge of collapsing as the widespread pandemic hits the critical tourism industry which employs about 7% of the total workforce and accounting for 12% of overall GDP with an estimated 40 million tourist arrivals last year. It is unlikely that consumers will resume travelling, at least in the next 6 months due to fears of further waves of virus outbreaks.
From deploying ‘ninja robots’ in hospitals, banning alcohol sales to curb social gatherings, to providing free COVID-19 tests, various measures have been taken in the country to contain the spread of coronavirus. Thailand corporates are also offering great help. Central Group has provided rental waivers and discounts as well as free accommodation to support medical staffs, while CP Group has invested around $3 million to build a mask factory to produce surgical face masks for free distribution to medical staffs and the general public.
The government has indeed spurred a larger amount in the economy in efforts to prevent further spillover effects of COVID-19 in its economy. Comparing stimulus packages in the past and the current coronavirus crisis, the amount of stimulus package unveiled by the current government has almost tripled from the 1997 Asian Financial Crisis rescue package from IMF. To date, the COVID-19 stimulus packages totalled up to nearly $74.15 billion. However, the question remains – can the temporary increase of government spending and tax cuts stimulate actual economic growth in the country when people are locked down at home?
Despite the economic stimulus packages introduced to the economy, an economy contraction is inevitable. Out of Thailand’s 38 million workforce, an estimated 7 million people in Thailand have lost their jobs to date. It is forecasted that the figure would go up to 10 million if the crisis drags on for another 2-3 months – putting Thailand’s unemployment rate at extremely high levels which would lead to a series of social issues. Even more recently, Thailand has been busy battling its forest fire in the northern parts of the country on top of the widespread coronavirus crisis. IMF has downgraded Thailand’s growth projections in 2020, making it the worst performer among Southeast Asian countries at a 6.7% contraction.
While Thailand has already been through many crises, we wonder if the country is ready to take the hit from COVID-19.