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Thailand’s Dire Economic Outlook Is The Worst in Asia

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 Thailand’s central bank is forecasting 8.1% contraction in GDP
 Tourism, trade are slumping, while strong baht is a worry

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% 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% 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 by Bloomberg predict Thailand’s economy will contract more than others in Southeast Asia, at 6%, and with a weaker rebound in 2021 of 4%.

Here’s what’s weighing down the Thai economy:image.png

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

At first glance, Thai exports appear to have held up relatively well this year, contracting for only two of the first five months of 2020.

As it turns out, distortions in one commodity have helped cushion the overall blow. Rising gold prices during the outbreak have led local investors to sell gold, boosting total exports. Excluding gold, total shipments have been hit hard by weak global demand and supply-chain disruptions.



The Thai baht has gained almost 6% against the U.S. dollar in the past three months, the second-best performer in Asia tracked by Bloomberg. Despite the Bank of Thailand’s three interest-rate cuts this year, which have brought the benchmark rate to a record low of 0.5%, the country’s success in containing the pandemic has kept the currency strong.

The central bank has showed concern about the baht’s strength, which hampers exports and will complicate the economic recovery. Officials have warned they’re considering additional steps to tame the baht if needed.


Note, there are several graphs that would not format correctly on LBR that you can view if you click the link.

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The whole world has been put back several years, but in Thailand's case it is seemingly more with such a reliance on tourism. Stubbornly refusing to devalue the baht can only go on so long as they have no tools left in the toolbox unless they go for zero interest rates. Negative interest rates are for losers.

Tourists don't give a shit about a country's interest rates, they focus exclusively on exchange rates. Interest rates are for locals.



Thailand recorded no foreign tourist arrivals or receipts for a second straight month in May

We can add June and all of July, plus several more months before tourists beyond any other Asian countries are allowed into their bubble.

This face-saving bullshit could well end up biting them harder in the backside than is truly necessary. Wiping some  painted smiles off a few of those smug high ranking faces wouldn't be such a bad thing.

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8% of GDP loss projected this year for Thailand?   8% only?  seriously?

Let's see: if "tourism accounts for 15% of GDP" and falls to HALF of what it was last year, right there you would have a loss of 7.5% of GDP   (15%x0.5).  And tourism this year will fall much more than 50%...

Not to mention that I had seen other sources estimating tourism's contribution to GDP at 20%+...

I'd say it's safe to say Thailand's GDP loss on account of tourism alone will be at least 10%.  Then there so many other sectors of the Thai economy that are also producing below last year.  Moreover, external demand (for Thai's exports) has to be weaker as partner economies have also slowed (and the baht strengthened!).


All this to say that the economic projections we are seeing worldwide from central banks, IMF, WTO, OECD, European Commission ALL SEEK to soften the blow... as time goes by, they get revised downwards and even so there is much overestimation built-in such as accounting as production all wages paid, including to workers (such as those on lay off with partial pay) who produced nothing for most of the year.

I'd say worldwide we are experiencing contractions in production and demand (production's mirroring concept) of upwards of 20%.   But the statistics will never show that...

The IMF's latest projection (2 weeks ago) for the world economy is of a 5% contraction ONLY.   Thailand's 8% would not even be that bad in light of that...


If only...

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I got an email this morning from Pacman. Out of the blue. Have not had any communications in 6 years until this AM.

Anyway, that got me thinking about the rest of you guys, and wondering what the hell the scene must be like in LOS right now.

Cannot imagine how the bars and the girls can survive with no tourists. Must be like a fucking ghost town (a "haunted town" as my wife says, LOL!)

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On 7/7/2020 at 8:37 PM, Rom said:

I'd say it's safe to say Thailand's GDP loss on account of tourism alone will be at least 10%.  Then there so many other sectors of the Thai economy that are also producing below last year.  Moreover, external demand (for Thai's exports) has to be weaker as partner economies have also slowed (and the baht strengthened!).

I agree with your analysis. Tough economic times ahead for Thailand and the rest  of the world.  Here are various forecasts.  Bank of Ayudhya (Krungsri, the yellow bank) predicts the worst decline.  I suspect that their original forecast was for an even deeper contraction but probably tweaked their model so that their end result was not too extreme and in line with  the other a banks while still projecting the worst GDP decline of all the banks.  

Bank of Ayudhya    -10.3%    2 Jul
Bangkok Bank    9.7    26 Jun
Capital Economics    9.0    24 Jun
HSBC    8.2    26 Jun
IMF    7.7    24 Jun
Siam Commercial Bank    7.5    25 Jun
Bloomberg Economics    6.5    26 Jun
OCBC    6.0    22 Jun
DBS Bank    5.5    29 Jun
Maybank    5.5    24 Jun
Standard Chartered    5.0    25 Jun    26 Jun

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The unofficial Thai economy took a hit as eleven and half tons of ketamine worth 30 billion baht, roughly 1 billion USD was seized in a raid yesterday.  Not sure if the 30 billion is street value or the wholesale price.   To put this in perspective, Thailand's 2019 net exports (exports minus imports) was 9.8 billion USD.  I've never been a K-Holer but the article says katamine is not popular in Thailand and almost all is exported.   Looks like Somchai is breaking bad!

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