Gloomy future as further economic contraction predicted

By The Nation

 

Locals flock to the beaches in Chonburi province to the East of Bangkok as the government eases lockdown restrictions, though the country remains closed to foreigners for fear of a second wave of infections. 

 

Siam Commercial Bank’s Economic Intelligence Centre (EIC) has further revised downward its economic projection for this year, and predicted that the baht will reverse its course and weaken in the Covid-19 fallout. 

 

Yunyong Thaicharoen, first executive vice president of EIC, said on Friday (June 5) that the centre has revised its projection to an economic contraction of 7.3 per cent this year from its previous forecast of 5.6 per cent. He added that the Covid-19 pandemic and resulting business shutdowns have impacted the economy more severely than expected. 

 

Tourist arrivals are expected to shrink by 75 per cent or drop to 9.8 million this year from close to 40 million last year, while the value of export in dollar terms is forecast to contract by 10.4 per cent year on year. 

 

However, the economy is expected to bottom out in the second quarter, shrinking 12 per cent, and though contraction will continue in the third and fourth quarters it will be at a slower rate. 

 

Businesses and households may find it tougher to repay their debts, while unemployment may hit the 3 million to 5 million mark. 

 

The research house believes the Bank of Thailand will maintain its key policy rate at 0.5 per cent for the entire year after a recent rate cut by 25 basis points. 

 

The baht is expected to weaken as more and more businesses resume operations after having closed temporarily for three months. The currency is expected to fluctuate between Bt31.5 and Bt32 per dollar. The current account will return to surplus at 2.4 per cent of the GDP after it hit a deficit in April, EIC said.

 

The centre’s assessment is similar to that of the central bank, which said recently that it was worried about currency appreciation. A strong baht may derail recovery from the crisis. The central bank has also warned that the current account surplus this year will be smaller than last year, and that the baht may reverse its course. 

 

Thailand’s current account deficit in April was the largest in two decades, coming in at US$3.1 billion (not including gold export) and $700 million (including gold export). 

 

Large current account surplus previously had contributed to a stronger baht.

 

Source: https://www.nationthailand.com/business/30389129

 

-- © Copyright The Nation Thailand 2020-06-06

 

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They said the same about the US a few months ago.

Today, more then 2 million jobs back and markets rising big time huge recovery starting.

The same will happen here I bet although take longer.

By this time next year I predict rising tourist numbers, maybe records as people getting back to work and pent up demand fuel the recovery.

3 hours ago, rooster59 said:

The currency is expected to fluctuate between Bt31.5 and Bt32 per dollar.

36 per USD would be nice. just keep it there for few years. 

8 hours ago, bkk6060 said:

They said the same about the US a few months ago.

Today, more then 2 million jobs back and markets rising big time huge recovery starting.

The same will happen here I bet although take longer.

By this time next year I predict rising tourist numbers, maybe records as people getting back to work and pent up demand fuel the recovery.

Markets in the US are rising only because the Federal Reserve is, for the first time in history, buying up stocks at a furious rate. Never has the Fed purchased such astounding amounts of stocks. The Fed has never played the market before. They have run out of other levers to pull to salvage the economy. 
one look at the Feds purchasing and you will see the stock market is mirroring the Fed’s huge stock buy. This isn’t recovery, this is manipulation 

Here’s my prediction: until that damned Baht weakens 2% or more, the outlook for tourism and exports is continued misery and downfall, approaching disaster.

9 hours ago, rooster59 said:

Gloomy future as further economic contraction predicted

Keep blaming Corvid, someone might believe you.