UTCC predicts 9.4% GDP contraction, up to Bt3trn in losses

[webfact]

UTCC predicts 9.4% GDP contraction, up to Bt3trn in losses

By The Nation

 

Thanawat Polvichai, rector at UTCC

 

The Covid-19 outbreak has punched a Bt2-trillion hole in the Thai economy, according to the University of the Thai Chamber of Commerce (UTCC), which has cut its projection for this year’s GDP to a 9.4 per cent contraction.

 

The coronavirus outbreak has already cost Thai economy Bt2.1 trillion, which could rise to Bt3 trillion if the economy does not recover in the second half of the year, said Thanawat Polvichai, rector at UTCC.

 

The university has almost doubled its projection of economic contraction in 2020 from 4.9 per cent to 9.4 per cent, said Thanawat, who is also chief adviser to the Centre for Economic and Business Forecasting at the UTCC.

 

The pandemic has severely impacted tourism, hotels, restaurants, trade, logistics and entertainment worth about Bt1.5 trillion. Meanwhile manufacturing and exports have taken a Bt500-billion hit. Drought has caused extra damage worth Bt76 billion, he said.

 

Exports are expected to sink this year by 10.2 per cent, gross investment by 8 per cent, and foreign tourists by 82.3 per cent to 7.03 million.

 

The economy in the second quarter is expected to contract by 15 per cent, further than the previous historic low of 12 per cent in the second quarter of 1998 during the Asian financial crisis, he noted.

 

The latest projected GDP revision is based on the assumption that the global infection rate will continue, fuelled by the second wave starting in June and having now passed the 18 million mark.

 

“Given the intensity of infection globally, the Thai government’s plan to welcome tourists under the travel bubble idea is unlikely to take off this year,” he said.

 

He also pointed out that not much of the Bt400 billion government recovery package has yet been injected into the economy.

 

The government should launch more stimulus packages in order to encourage consumption, he said.

 

Meanwhile small and medium-sized enterprises continued to face difficulty in obtaining credit despite the Bank of Thailand implementing a Bt500-billion soft loan scheme via commercial banks. He said the banks were demanding collaterals from borrowers, resulting in most SMEs being unable to access the loans.

 

If SMEs could not get liquidity, they will layoff about 1.9 million workers this year, he warned.

 

In its survey of 800 SMEs this month, the UTCC’s Centre for Economic and Business Forecasting found that 61.7 per cent of complained of being hit hard by the virus crisis, 26.9 per cent medium-hard and 11.2 per cent mildly hit.

 

Tourism, hotels, restaurants, health and beauty, and jewellery and handicraft are among the businesses hardest hit by virus outbreak.

 

The auto parts industry is among the most vulnerable as it cannot survive the downturn for more than three months.

 

Meanwhile food and beverage, jewellery and ornaments, wholesale, travel and recreational, hotels and accommodation, logistics, construction and property developers, are able to keep business running for six months.

 

Able to maintain businesses for as much as nine months are textile and fashion, handicraft, plastic and rubber production, printing, furniture and wood products, retail, restaurants and beauty service.

 

SMEs are demanding soft loans, a debt moratorium and tax cuts, according to the UTCC survey.

 

Source: https://www.nationthailand.com/business/30392373

 

-- © Copyright The Nation Thailand 2020-08-04

 

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[keith101]

All the bad news about the economy and yet the baht stays strong and they say they dont manipulate it , if true drop your rate another 25 basis points .

[mr mr]

that's all and great for the 1st quarter. now what about the other 3. 

[petermik]

The chinese will be back shortly to rescue them.....

[ThailandRyan]

The hits just keep on coming but the USD and the baht never really change. It can only get worse unless they find a new business model and capitalize on it.  Maybe if they built a rocket launch pad for Elon Musk and NASA, they could launch SpaceX tourism from Thailand.

[steven100]

so the UTCC have a dart board in the meeting room also

[PatOngo]

28 minutes ago, webfact said:

He also pointed out that not much of the Bt400 billion government recovery package has yet been injected into the economy.

Now here's a crazy thought, is it remotely possible that some of it has already been injected into the trough?

[BestB]

So what is government doing about any of this ? Absolutely nothing .

 

OP is spot on about SME loans, it’s a joke. Have to apply like a personal loan and approval , well, 3 months and I am still waiting to hear back .

 

government has allocated money for Sme loans supposedly , so why are not banks lending it out ?

 

latest was suppose to be through Omsin bank and yet Omsin bank would not even speak with you unless you open an account costing you 2000 non refundable.

 

10 million unemployed making 20%.  With more to come. All these people are not paying into social security yet many are getting paid .

 

whats next? Wait for total collapse ? Why not do balance of checks to see what is workable in the long run?

 

 

[johng]

Why aren't they using  the  huge foreign currency reserves ?

https://www.bot.or.th/App/BTWS_STAT/statistics/ReportPage.aspx?reportID=80&language=eng

 

[Dumbastheycome]

Finally some recognition of reality ! Not that Thailand is alone in this reality.

Now need come the realistic answers on how to offset the immediate social impact let alone an overall way forwards. Unfortunately the suggestion of  increasing local consumerism is contradictory to tightening credit policies due to the already massive public debt burden.

 

 

[Dumbastheycome]

20 minutes ago, johng said:

Why aren't they using  the  huge foreign currency reserves ?

https://www.bot.or.th/App/BTWS_STAT/statistics/ReportPage.aspx?reportID=80&language=eng

 

Perhaps  to offset any  collapse of the Baht?

[86Tiger]

44 minutes ago, Dumbastheycome said:

Perhaps  to offset any  collapse of the Baht?

My thought on the question as well.

 

The reserves are all that is holding this pinata together. They are "using the huge foreign currency reserves" to best extent possible.  If the reserves are spent, well, it will not be pleasant....

[herfiehandbag]

2 hours ago, PatOngo said:

Now here's a crazy thought, is it remotely possible that some of it has already been injected into the trough?

I think that a less controversial, and certainly subtler explanation would be to say that it has been earmarked for investment with some of the government's more influential partners; because of their close links and high standing a more informal application and accounting process will be more appropriate. It will of course be as transparent as commercial conditions will allow.

[JusticeGB]

There seems to have been a controlled fall in the baht since the end of June. The UK pound is up about 1 baht and the USA $ up to 31.20 from 30.85.

[Bender Rodriguez]

is that just for tourism that was always said it was only a small part of thai economy ?

[hotchilli]

7 hours ago, ThailandRyan said:

The hits just keep on coming but the USD and the baht never really change. It can only get worse unless they find a new business model and capitalize on it.  Maybe if they built a rocket launch pad for Elon Musk and NASA, they could launch SpaceX tourism from Thailand.

We know how that might end up.

[Cake Monster]

UTCC now predicting a 9.4 % contraction in GDP.

7 hours ago, webfact said:

SMEs are demanding soft loans, a debt moratorium and tax cuts, according to the UTCC survey

Now, this is where the real problem lies, because already, Commercial Banks are projecting as much as 40% NPL, and with Household debt currently running at 80% of GDP, that an awful lot of Money.

Who ?, is going to give these SME,s more money, when they are clearly projected to default on 40% of the money already Loaned to them.

UTCC are starting to realise the issues that Thailand has with Household Debt, and therein is the reason the baht cannot be devalued by BOT.

I personally think that the UTCC is still way off the full damage of Covid to the Thai Economy and more realistically its going to end up closed to something like a 15-17% GDP contraction by Year end.

 

[sammieuk1]

The university has almost doubled its projection of economic contraction in 2020 from 4.9 per cent to 9.4 per cent

 

Try again and triple it! what are you going to do general appart from buying a plane ????