Central bank worries virus impact could drag growth below 2 per cent

By THE NATION

 

Don Nakornthab, senior director at the Bank of Thailand/ File Photo

 

The Thai economy could be hit hard if the new coronavirus (Covid-19) outbreak is prolonged, Don Nakornthab, senior director at the Bank of Thailand, said on Thursday (February 13).

 

The economy is already weighed down by the impacts of the delay in implementing the annual budget and the impact of the drought.

 

Economic fallout from China's coronavirus mounts across the globe

 

The Tourism Authority of Thailand estimates that the number of foreign tourists this year might drop by 5 million, which would result in revenue loss of Bt250 billion this year, due to the impact of the Covid19.

 

“If so, the impact on the economy will be large and it will lower growth rate by 1.5 percentage points. Earlier the central bank had forecast growth rate at 2.8 per cent. The virus impact could slash growth to just 1.3 per cent,” he warned.

 

The tourism sector makes up 20 per cent of gross domestic product (GDP) and employment in related businesses including hotel, restaurants, retail, logistics represent 40 per cent of labour force. The farm sector accounts for 40 per cent of labour force, but the sector faces a severe drought this year.

 

The only hope for the economy is through government spending, but the annual budget for fiscal 2020 has been delayed as Parliament has to revote the draft bill following the Constitutional Court’s ruling, he lamented.

 

The country depends too much on Chinese tourists, who represent 27 per cent of total visitors. As China has become the epicentre of the virus outbreak, Thailand needs to find alternate sources for tourists, he said.

 

If the country faces a sharp decline in tourists, then the current account surplus this year would be much lower. Investors may no longer see the baht as a safe-haven currency as in the past, he added.

 

Somjai Phagaphasvivat, a political scientist, said the government has to work hard under unfavourable circumstances in order to shore up economic growth between 2 to 2.2 per cent, compared with 2.5 per cent last year. Thai household debt is equivalent to 79 per cent of GDP, the highest in Asean and the second highest in Asia, which will erode the purchasing power of consumers, he added.

 

Source: https://www.nationthailand.com/news/30382127

 

-- © Copyright The Nation Thailand 2020-02-14

Follow Thaivisa on LINE for breaking Thailand news and visa info

Thai household debt is equivalent to 79 per cent of GDP

 

That is frighteningly high. 

9 minutes ago, webfact said:

Central bank worries virus impact could drag growth below 2 per cent

with all the poor/negative attitude/decisions, poor IMO performance, high baht, road accidents, military junta governing, etc., etc., TAT placing all eggs (Chinese) on the same basket, they are lucky if the economy will grow at all

7 minutes ago, webfact said:

Central bank worries virus impact could drag growth below 2 per cent

Every time we read a report from the BOT, they always claim to 'be worried'.

For all the worrying they're doing, it's not helping at all.

 

Reading the comments after every BOT article, posters keep saying the strength of the Baht is what's keeping tourists away. No measures have been taken to alter it, despite all the BOT's 'worrying'.

Perhaps the BOT need to start 'wringing their hands' if that might help?

19 hours ago, webfact said:

The tourism sector makes up 20 per cent of gross domestic product (GDP) and employment in related businesses including hotel, restaurants, retail, logistics represent 40 per cent of labour force.

 

The country depends too much on Chinese tourists, who represent 27 per cent of total visitors.

So if the Chinese stopped , they lose 25% of visitors and 5% of GDP ? 

 

Sorry, but with no exports due to high baht and -25%tourism, This guy speaks like Manchester City but plays like the Scunthorpe Reserves Under 11's one legged team

Even more reasons for the BOT to lower the baht..

40 percent working in tourism. Talk about putting all in one basket. Thailand has to develop in another direction.

Some posts using trolling memes have been removed. 

23 hours ago, webfact said:

The tourism sector makes up 20 per cent of gross domestic product (GDP)

Many TV posters have been telling us it's only 10%. ????????????

 

For years, I have been saying it's closer to 30% when sex industry is included. And now the government suddenly goes from saying 10% to 20%, so we know 30% is a reasonable estimate.

 

The tourism industry is almost the ONLY thing successive Thai governments cry about all the time. It's obvious that the country is still embarrassingly reliant on cheap tourists.

 

And yet they somehow treat tourists like dirt.

 

Good business model. ????

Edited February 15, 20206 yr by Fex Bluse

Top 3 ways to revive the economy:

 

1. Lower the Baht.

2. Lower the Baht.

3. Lower the damned Baht.

It seems one obvious takeaway here would be this:

 

If your economy is heavily dependent on foreign investment and tourism, then treating foreigners like criminals is ill-advised.

 

 

On 2/14/2020 at 12:59 PM, BobbyL said:

Thai household debt is equivalent to 79 per cent of GDP

 

That is frighteningly high. 

In our Western Societies, the Household debts are sometimes higher than this.

The difference is, that we have the ability to pay back those debts due to prudent lending on Mortgages Etc.

But here in Thailand there is a very lax lending regime, and money is lent without any real collateral for security.

Thats the frightening bit

A troll post has been removed. 

A female friend of my wife just bought a new Toyota Yaris....never before she owned or drived a car in her life and of course she not have a driver's license yet....(thai driving license test in village is a joke). 

She paid in front 1.000 baht and have to pay the rest in 84 months plus interest of course. 

She is working in a Tesco supermarket in rural North Thailand.....she is "selling" credit cards for new customers that sign up with the bank and starts a new account with a new credit card small loan. 

She makes good money (18.000?) from her commission but she never get through the month and never saved 1 baht in her life.....always asking sharkloan money and many times asks borrowing from friends that not longer help her. 

Of course she can not afford the car and the expenses that comes with it but nor the bank not her really think about it. 

Almost all of Thai people I know have the same mentality and when the <deleted> will hit the fan and money dissappear things will be very very ugly. 

No morgeges no guarantee no income and loans taken with interest rate of 1,35 %......when (not if anymore) the perfect storm comes and economy take the downturn and people starting to default the interest rate will skyrocket and even who can before pay their loans will be not able any more. 

 

 

 

Please reform Thailand.

9 hours ago, RichardColeman said:

So if the Chinese stopped , they lose 25% of visitors and 5% of GDP ? 

 

Sorry, but with no exports due to high baht and -25%tourism, This guy speaks like Manchester City but plays like the Scunthorpe Reserves Under 11's one legged team

Of the remaining 20% not working in agriculture and tourism, you have to subtract the government employees, which leaves very few left for high tech high value manufacturing and services. Income per capita on a lot of tourism and agriculture jobs must be low, and explains the 80% private debt ratio.

On 2/14/2020 at 1:11 PM, bluesofa said:

Every time we read a report from the BOT, they always claim to 'be worried'.

For all the worrying they're doing, it's not helping at all.

 

Reading the comments after every BOT article, posters keep saying the strength of the Baht is what's keeping tourists away. No measures have been taken to alter it, despite all the BOT's 'worrying'.

Perhaps the BOT need to start 'wringing their hands' if that might help?

Sitting on their hands and talking are their only strong points and they always hope that doing nothing will make the problems vanish.  If they 'do anything' at all it's normally form more Committee's or Panels !

We were told at the beginning of the year by TAT  there would be 40 million visitors this year; now this bloke is saying there could be 5 million less, i.e. there will still be 35 million coming.    Anyone who believes that should never be in a senior position at any bank because they are dreaming !

3 minutes ago, trainman34014 said:

We were told at the beginning of the year by TAT  there would be 40 million visitors this year; now this bloke is saying there could be 5 million less, i.e. there will still be 35 million coming.    Anyone who believes that should never be in a senior position at any bank because they are dreaming !

I predict 35M less tourists, and only 5M turning up.

If I'm closer than them .......... can I have their job?

7 hours ago, DrTuner said:

40 percent working in tourism. Talk about putting all in one basket. Thailand has to develop in another direction.

You can't develop properly with an education system like Thailand has; and besides, there is not a lot of Grey Matter to work with !

I wonder what makes Thai household debt so high. I mean second highest in Asia. It's really something. 

 

The irony is when some tourist say that price is expensive in Thailand. Some people (I guess local Thai) defend by saying that bill is cheaper in Thai than western country (don't know how to argue with this logic). 

 

No offense to Thai people. 

Edited February 16, 20206 yr by Acrylic