Covid-19 and the economy: Thai takes bigger hit than 1997 crisis - three million could be unemployed by year end

[webfact]

Covid-19 and the economy: Thai takes bigger hit than 1997 crisis - three million could be unemployed by year end

 

 

The Thai Chamber of Commerce has painted the grimmest assessment yet of the state of the Thai economy after the first stage of the coronavirus pandemic.

 

And they fear that unless government intervention is undertaken things are only going to get worse with the potential for three million people out of work by the end of 2020. 

 

Tourism has been decimated in particular taking a greater than 80% hit.

 

All in all the effect of the pandemic is worse than the devastating "tom yam kung" financial crisis in 1997 that had its roots in the collapse of the economy in Thailand.

 

Picture: ThaiPBS

 

That crisis saw masses of repossessions and a collapse in the Thai baht. This time round the baht remains strong but unemployment is severe, notes Thaivisa.

 

Thanawan Phonwichai, an advisor to the university of the Thai Chamber of Commerce was making assessments and forecasts as reported by the Thai media yesterday.

 

In a worst prediction yet the Thai economy is expected to contact 9.4% with 2 trillion baht in losses. 

 

Tourism is down 82.3% and is the worst hit major sector. 

 

Only gradual improvement is expected if the new cabinet can introduce further stimulus measures. They need to extend cheap loans to give companies and individuals a lifeline to avoid more closures and more unemployment. 

 

But further closures and job losses seem inevitable over the next 3-6 months, she said. 

 

As Thais tighten their belts expenditure in the luxury goods market will be limited. 

 

Picture: ThaiPBS

 

If help is not provided to SMEs (small and medium enterprises) she feared that by October another million people could be made redundant and by year's end the figure could be an extra 2 to 3 million people. 

 

This downturn would be most keenly felt in the industrial sector. 

 

Gross Domestic Product (GDP) is expected to plunge 15% in the second quarter making it the worst since records began. This compares to 12% in the second quarter of 1998 following the 1997 financial crisis. 

 

Apart from tourism, sectors of the economy that are facing greater than 70% contractions include hotels, restaurants, fitness, beauty, jewelry and the service industry.

 

Sources: ThaiPBS | Channel 7

 

-- © Copyright Thai Visa News 2020-08-06

 

- Whatever you're going through, the Samaritans are here for you

- Follow Thaivisa on LINE for breaking COVID-19 updates

[Matzzon]

But the baht is still strong, right?

[stephenterry]

28 minutes ago, Matzzon said:

But the baht is still strong, right?

Mainly because other countries are suffering economic weaknesses, especially the USA. 

[bkk6060]

6 minutes ago, stephenterry said:

Mainly because other countries are suffering economic weaknesses, especially the USA. 

Record low interest rates, inflation and the Nasdaq is at all time highs.  

[stephenterry]

9 minutes ago, bkk6060 said:

Record low interest rates, inflation and the Nasdaq is at all time highs.  

Exactly why the economy is due for a massive hit. Mark my words, the stock market will crash soon. Real gross domestic product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter of 2020, real GDP decreased 5.0 percent.

[Pattaya Spotter]

54 minutes ago, Matzzon said:

But the baht is still strong, right?

Other countries' currencies are weak.

[Pattaya Spotter]

16 minutes ago, bkk6060 said:

Record low interest rates, inflation and the Nasdaq is at all time highs.  

When the Fed and Treasury Department float the credit and stocks markets with literally trillions of dollars...yes the markets will levitate (recall they were down 30% and heading lower) a month or so into the crisis in March/April of this year). Wait and see what happens when the money spigot is turned off.

[petermik]

Simple solution devalue the hugely inflated BAHT...

[Rancid]

Western countries that went into lock down, since cases are popping up again, have decided to...go into lock down again, just longer. Its the old adage for the ignorant, if it doesn't work the first time, then just do it again, but more of it.

 

We are probably looking at the Greater Depression coming up, the world economy is toast, its just that most haven't woken up to it yet. There are going to be a lot of poor, angry and unemployed people wandering around which will lead to the obvious consequences. That will not be pretty in Thailand or anywhere else.

 

Those arguing against lock down were not heartless, it was just obvious that it would lead to an economic disaster much worse than the virus. Even UNICEF is predicting hundreds of thousands of dead children due to the virus lock downs, and that is just the tip of the iceberg. So who was really heartless?

[trainman34014]

I would say 3 Million unemployed is a very conservative figure; 6 million may be nearer the mark and there is already an undercurrent of protest in The North about what the Brainless of Bangkok are going to do about it apart from offering 'Holiday Vouchers' !

[Pattaya Spotter]

I'm noticing condo prices and rents in Pattaya are back to 1997 prices and daily rental prices for short term stays are down as low as US$ 11.

[Pattaya Spotter]

1 hour ago, petermik said:

Simple solution devalue the hugely inflated BAHT...

Maybe consider baht denominated assets and income streams ????

[johng]

4 hours ago, webfact said:

things are only going to get worse with the potential for three million people out of work by the end of 2020. 

I thought I read the other day that 10 million are unemployed already ?

they would be doing very well to get 7 million back to work so soon.

[Fex Bluse]

The Baht being strong will contribute to the Thai economy collapse. Currency is not like Army. Strong is not always good. 

 

Thailand has nothing the world absolutely needs. Can get rice from elsewhere. Can assemble hard drives elsewhere easily. 

 

Without fresh tourism revenues, they will be severely hurt. And most tourists won't be coming back until end of next year EARLIEST. 

[86Tiger]

1 hour ago, Rancid said:

Western countries that went into lock down, since cases are popping up again, have decided to...go into lock down again, just longer. Its the old adage for the ignorant, if it doesn't work the first time, then just do it again, but more of it.

 

We are probably looking at the Greater Depression coming up, the world economy is toast, its just that most haven't woken up to it yet. There are going to be a lot of poor, angry and unemployed people wandering around which will lead to the obvious consequences. That will not be pretty in Thailand or anywhere else.

 

Those arguing against lock down were not heartless, it was just obvious that it would lead to an economic disaster much worse than the virus. Even UNICEF is predicting hundreds of thousands of dead children due to the virus lock downs, and that is just the tip of the iceberg. So who was really heartless?

This is going to be a hard, cruel lesson for many.

 

[GigsGigs]

54 minutes ago, Pattaya Spotter said:

I'm noticing condo prices and rents in Pattaya are back to 1997 prices and daily rental prices for short term stays are down as low as US$ 11.

And that is a good thing, my friend.

[Pattaya Spotter]

2 minutes ago, GigsGigs said:

And that is a good thing, my friend.

Agree...as I'm on the buying/renting side of the equation. 

[Pattaya Spotter]

18 minutes ago, Fex Bluse said:

The Baht being strong will contribute to the Thai economy collapse. Currency is not like Army. Strong is not always good. 

 

Thailand has nothing the world absolutely needs. Can get rice from elsewhere. Can assemble hard drives elsewhere easily. 

 

Without fresh tourism revenues, they will be severely hurt. And most tourists won't be coming back until end of next year EARLIEST. 

I've not seen any case studies of countries collapsing because of a strong currency...plenty for those that had weak ones. Can you point me to any such studies as they would be interesting reading.

 

Nobody has anything others "absolutely" need; however countries have comparative advantages over others in certain goods and services. Therefore it makes economic sense to engage in trade, which lets countries specialize in what they do best and leaves us all richer and better off.

[Deli]

4 hours ago, petermik said:

Simple solution devalue the hugely inflated BAHT...

and open the borders !

[geistfunke]

Besides tourism, Thailand has only one strength: food production. The world after Covid will now demand healthy food. But with more and more chemical food additives, more glyphosate, GM plants and even more pesticides, the development in Thailand has gone in the completely wrong direction. For the next 10 years I do not see a positive future in Thailand. The train has hit the wall at full speed. 

[brucegoniners]

So is the Thai Baht going to go back to 48 to the dollar? I'm all over that bay-beee!

[Aussie Col]

4 hours ago, petermik said:

Simple solution devalue the hugely inflated BAHT...

Which will help exports and they should ease the entry rules to get more tourist here and who will spend money and save jobs.

[hashmodha]

What I read recently is although Thailand doesn't manufacture gold,it is actively trading in gold with its dollar reserves. Have no idea how this maps out, someone is making a fortune,and then we read this,if this is going to be worse than 1997, then the outcome will be extremely serious,It would be nice to have a decent exchange rate,at least so retirees like me can spend a little extra for essentials rather than hoping the rate of exchange gets a little better and convert in a hurry, only last week the rate was good... now fallen again!????!

[hashmodha]

2 minutes ago, brucegoniners said:

So is the Thai Baht going to go back to 48 to the dollar? I'm all over that bay-beee!

And the £ to 70!?

[MRToMRT]

I am surprised its taken this long to see this kind of projection in the news. Europe and US had articles like this in the first month of their outbreaks. They (Europe and US) are borrowing like never before to try and prop up their economies whilst praying a solution to the virus will come before the debt hole swallows them forever.

 

Why exactly did the Thai economy tzars quit last month? Because no one was listening to them about what the future held and the need for swift action?

 

 

[ChaiyaTH]

Three million in addition to 9 million already aside of soon to be entirely broke farmers + water shortage. So essentially 25% of the working poulation will be jobless and another 40% are useless <deleted> already now anyway.

[Pattaya Spotter]

22 minutes ago, geistfunke said:

Besides tourism, Thailand has only one strength: food production. The world after Covid will now demand healthy food. But with more and more chemical food additives, more glyphosate, GM plants and even more pesticides, the development in Thailand has gone in the completely wrong direction. For the next 10 years I do not see a positive future in Thailand. The train has hit the wall at full speed. 

Is that why the baht is so "strong," because investment professionals and currency traders believe development in Thailand has gone completely wrong and the next 10 years will be bleak for the country's economy?

[ChaiyaTH]

4 minutes ago, Pattaya Spotter said:

Is that why the baht is so "strong," because investment professionals and currency traders believe development in Thailand has gone completely wrong and the next 10 years will be bleak for the country's economy?

The baht is so strong due to an faked uptrend of the past years, blown up by greed, that now ended. Same anywhere on earth but ppl remain ignorant. The financial system is fake and tax payers keep paying for every crisis while the elite and smart ppl relax. 

 

A debt that can not be repaid is called slavery. Thank the sheeps!

[Jimbo2014]

7 hours ago, webfact said:

Apart from tourism, sectors of the economy that are facing greater than 70% contractions include hotels, restaurants, fitness, beauty, jewelry and the service industry.

Thailand is recovering its domestic economy.  There are also a few bright spots.  There are apparently some indications that industry is being relocated out of China as countries such as Japan, USA and Australia diversify their supply chains.  Thailand is apparently likely to benefit from these moves.  If China can eliminate covid then Thailand will be one of the few countries receptive to Chinese tourists meaning no competition.  Domestically people are now traveling within Thailand and behaving more normally which is helping the local service economy.  If there is a crash it could be short lived and may represent some opportunity for those with cash looking for deals.

[onebir]

38 minutes ago, hashmodha said:

What I read recently is although Thailand doesn't manufacture gold,it is actively trading in gold with its dollar reserves. Have no idea how this maps out, someone is making a fortune,and then we read this,if this is going to be worse than 1997, then the outcome will be extremely serious,It would be nice to have a decent exchange rate,at least so retirees like me can spend a little extra for essentials rather than hoping the rate of exchange gets a little better and convert in a hurry, only last week the rate was good... now fallen again!????!

IDK about the central bank, but won't Thai households be selling gold (to raise funds if they're affected by the recession &/ take profits)? If so, those 'exports of gold' will support the baht for a while. (And any efforts to weaken the baht by the central bank could backfire, by raising the price of gold in baht and triggering more profit-taking.)