Thai economic outlook highly uncertain, risks tilted to downside - central bank

By Satawasin Staporncharnchai

 

FILE PHOTO: A passenger carries his bags at the Suvarnabhumi Airport as the government extended a ban on incoming passenger flights until the end of April, following the coronavirus disease (COVID-19) outbreak, in Bangkok, Thailand April 16, 2020. REUTERS/Soe Zeya Tun/File Photo

 

BANGKOK (Reuters) - Thailand's economic outlook remains highly uncertain with risks tilted to the downside and the central bank stands ready to use necessary tools to support an economy hammered by the coronavirus pandemic, central bank officials said on Wednesday.

 

Southeast Asia's second-largest economy contracted the most in 22 years in the second quarter, with tourism hit hard.

 

An economic recovery will take at least two years to return to pre-pandemic levels and will be "uneven", the Bank of Thailand (BOT) said in a statement at an analysts' meeting.

 

"We have to wait until the second half of 2022 to see economic activity back to pre-COVID levels, but there are still many downside risks," senior director Don Nakornthab said, adding reopening to foreign tourists would be key.

 

The BOT expects 6.7 million foreign tourists this year and 9 million in 2021. Last year's 39.8 million visitors accounted for 11.4% of GDP.

 

Thailand's plans to receive visitors again have been delayed.

 

The BOT expects the economy to contract by a record 7.8% this year before growing 3.6% next year.

 

The central bank reiterated a need to preserve limited policy room for the most effective time and said is ready to use appropriate policy tools as necessary.

 

The policy rate is at a record low of 0.50% after three cuts this year. Most analysts see no further easing this year.

 

More targeted fiscal measures will be needed to support the recovery, Deputy Governor Mathee Supapongse said, adding that BOT will soon announce measures on soft loans and expiring debt.

 

The BOT will also ease rules on foreign currency deposits (FCDs) early next year and for Thais to directly invest overseas to balance fund flows.

 

"Timing will be quick... but it will not be done at once. The first phase should be for FCDs with fewer conditions," Mathee said.

 

Separately, Finance minister Arkhom Termpittayapaisith told reporters the fiscal position remained strong and the government needed to urgently increase spending.

 

(Reporting by Satawasin Staporncharnchai; Writing by Orathai Sriring; Editing by Ed Davies)

 

-- © Copyright Reuters 2020-10-14

 

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17 minutes ago, webfact said:

An economic recovery will take at least two years to return to pre-pandemic levels and will be "uneven", the Bank of Thailand (BOT) said in a statement at an analysts' meeting.

And yet the baht remains strong ?

Khun Don needs to go on a TAT seminar, he's far too downbeat

1 hour ago, webfact said:

Thailand's economic outlook remains highly uncertain

I don't see any uncertainty. Thailand is facing an economic disaster, thanks to the selfish policies of the powers that be. What's uncertain about this???

Aussie $ taking a bath. Gbp taking a pounding. Go the Baht! Sell more beer and buy up the world. Might be time to look elsewhere for the humbled expats

With the events unfolding as I type this, maybe the bhat will fall after all... 

Those with a VPN will probably know what I'm talking about.  

it's all just a big misunderstanding ....  TAT say's  5.1 Trillion baht coming.   

The problem is twofold.  Wuhan virus gets the headlines, and should, since it has devastated tourism.  Yet the Chinese virus obscures a much deeper evil: the obscenely high Baht.

The UK government has 6 vaccine candidates. Not sure how many are in the final stage of testing where they check the effectiveness of the vaccine. It sounded like they have only checked that the body produces antibodies from the vaccine. But no information if it reduced infection rates.

To be proven effective, each of those 6 vaccine candidates need to test thousands of people, with a percentage of those being tested getting a placebo. To be proven effective, the percentage of people getting the placebo and getting infected has to be significantly higher than the people getting the vaccine candidate. If enough people get into placebo do not get infected, then there is no way to show if the vaccine candidate had any positive effect.

It’s about to fall over the cliff that’s why they want foreigners to bring in the money only the other day they announced foreign owners of properties can return providing they stick 3 million in a Thai bank account the Thai economy is busted that’s why they keep seeing the finance ministers resigning time to pull your baht out and stick it under the bed before everything goes belly up ☹️☹️☹️☹️☹️

16 hours ago, webfact said:

"We have to wait until the second half of 2022 to see economic activity back to pre-COVID levels

There is simply too much uncertainty to be able to make such statements now . It is only speculation based on ' wishful thinking ' .

Too many factors about the future development of the situation cannot be known by now .

There are always at least two possibilities about the further development , it could end , or not . A vaccine that provides lasting immunity could be found , or not ...

Even if one would be found , could it ever be distributed to everybody ?

Some people will not take any vaccine , diluting it's potential effectiveness ...

The world is a mess , the people are confused and becoming more angry because of the effects of the precautions against the virus.

If one tries to be realistic and objective , it is not difficult to see that there will be many problems coming ...

 

16 hours ago, webfact said:

The BOT expects the economy to contract by a record 7.8% this year before growing 3.6% next year.

Wow , what a precise vision on some future development ... how can they know this ?

If they knew the future , why did they not foresee what is happening now ?

This is all BS blabla without any foundation in reality .

6.7 million foreign tourists this year with the borders closed? Maybe if they opened the borders tomorrow and offered free visas to China but no way that's going to happen.

17 hours ago, webfact said:

The BOT expects 6.7 million foreign tourists this year and 9 million in 2021. Last year's 39.8 million visitors accounted for 11.4% of GDP.

6.7 million from where? And since tourism only 11%, any particular reason why so many unemployed and first on agenda seems to be to bring the tourists back? 

Until April? 

 

I can see another "amnesty" coming. 

17 hours ago, webfact said:

Thai economic outlook highly uncertain, risks tilted to downside - central bank

The uncertainty is coming from lack of long term government economic policy.

Both economy & tourism were on the slide long before the Covid excuse came along.

Tourism yes is a big loss but we were always told it was only a small percentage of Thailands GDP...
So why do we hear daily about tourism as if it's the only thing Thailand does.

Surely manufacturing, import/exports can prop-up the ailing GDP?

Or have we been mis-lead again?

19 minutes ago, NorthernRyland said:

6.7 million foreign tourists this year with the borders closed? Maybe if they opened the borders tomorrow and offered free visas to China but no way that's going to happen.

Borders were open in January and February and a part of March.

So that 6.7 million seems to be the Q1 number based on the annual 40 million in 2019

17 hours ago, webfact said:

Thai economic outlook highly uncertain, risks tilted to downside - central bank

During a worldwide pandemic...yaa think ????????????

The Kingdom will survive

The Baht will survive

Thailand has overcome worse situations in the past and will overcome this situation.

The Baht remains strong for a reason.

13 minutes ago, NorthernRyland said:

6.7 million foreign tourists this year with the borders closed? Maybe if they opened the borders tomorrow and offered free visas to China but no way that's going to happen.

I wouldn't offer anything free to China as they put us in the state we are in now. But I do agree with opening the borders and letting tourist in from low risk countries. Thailand relies to much on tourism. Tourism is the last thing on peoples minds right now, it's a shame the government can't see this!

17 hours ago, keith101 said:

And yet the baht remains strong ?

you would think it would go the way it did in 97, something not right how this bhat has been strong even before Corona

1 hour ago, crazykopite said:

It’s about to fall over the cliff that’s why they want foreigners to bring in the money only the other day they announced foreign owners of properties can return providing they stick 3 million in a Thai bank account the Thai economy is busted that’s why they keep seeing the finance ministers resigning time to pull your baht out and stick it under the bed before everything goes belly up ☹️☹️☹️☹️☹️

Better to hide your foreign currency. It is very easy for this fake democratic government to force conversion of all foreign currency accounts to baht if the baht goes south to both bolster the baht and fatten up foreign currency reserves.

Well, I personally believe, the Corona hysteria just aggregated the downslide of Thailand; figures were very bad in 2019 already.

Of course this is being utterly misused by the spokespersons with emergency funds, emergency decrees (extended monthly on a month-to-month basis). It also provided for the smoke screen; the real fact is that Thailand, irrespective of any outside-Thailand-issue is in free fall. 

The recent development of the last few weeks shows tremendous cracks in the make-up cover of the official Thai face - if you ask me. The last 24 hours were quite advisory too. 

In addition, I query the official claim of tourism contributing 11.4% of Thailand's gross domestic product. By the whining of all those hoteliers and restaurant owners - specially in family resorts like Pattaya (!) - the impact is much bigger than "just 11.4%". At the same time the TAT is going hell over heels with all sorts of forecasts which must be the direct result of seriously good weed the boys there seem to smoke. 

Thailand - quo vadis? What a pity for such a nice country with (generally) very nice people ....... 

The wrong man is heading the country. Don't expect a military general and an inept upper and lower house filled with military sycophants to be able to provide the right strategies and root for the people.   

One of the most important factors that will affect the Thai economy is political stability and that looks like it is coming to an end with events in Bangkok yesterday and Suthep the Southern gangster mobilising his troops again despite joining the monkhood and promising to stay out of politics forever. No mention of these important events anywhere on the Thailand news feed, which I find utterly baffling yet unsurprising, given the grave importance to the nation and the expat community.

 

Political unrest, COVID-19 and a global economic recession or depression will see a complete and total collapse of many countries' economies that have a reliance on foreign inflows. Thailand is one of those countries with a reliance on exports, tourism and foreign investment in manufacturing.

 

Sure, Thailand will survive but it won't be the same country coming out the other end, not by a long shot.

Important to note that a State of Emergency has been declared in Bangkok which are not words you want to hear when discussing economic recovery.

18 hours ago, keith101 said:

And yet the baht remains strong ?

Approaching a cliff can be slow but when going over the drop is sudden.

Allow ferangs to buy 1 house will generate a lot of offshore money

17 hours ago, Flying Saucage said:

I don't see any uncertainty. Thailand is facing an economic disaster, thanks to the selfish policies of the powers that be. What's uncertain about this???

Nothing uncertain. The drop when going over a cliff is always sudden no matter how much one is in denial when approaching it.

????????????

all <deleted> the Thai baht is doing well starting to eat up the Aussie dollar again already, how can that be if Thailand is broke? one thing 99% of goods sold in Thai is made in China there fore China controls the Thai baht

The high baht has been an obstacle to tourism for years. The problem will be how many potential future tourists will have jobs once this pandemic is over? Most of the worlds economy’s will have been severely damaged.

 

If any hope remains in picking up potential tourism post Covid then the baht will need to be devalued and the current administration needs to stop making them jump through hoops to spend their money here.