Ministers hoping the kingdom can come through 2nd virus wave with minimal economic damage
Latest figures from the Fiscal Policy Office at the Ministry of Finance show consumer confidence buoyed to its highest point since March this year in November and a pickup across the economy driven by boosted public expenditure. The ministry is suspending judgement on the current situation until the middle of January as the public is urged to help rein in the potential damage of this second wave of the virus spreading across the kingdom.
Thailand’s economic planners are hoping that the public’s efforts can help stave off the worst-case scenario as a new second wave of the virus sweeps the country. Economic planners are hoping to avoid widespread lockdowns and cessation of business activity just as the government’s pragmatic and steady handling of the economy had been bearing fruit with rising incomes and consumer confidence reported for November.
Thailand’s Finance Ministry is holding its cards close to its chest as it announced this week that it will be revising its outlook for the economy both for the outcome of 2020 and the projection moving forward into 2021, sometime in January.
This comes as a second outbreak or wave of the Covid 19 virus appears to be stalking the country with the government reacting carefully and cautiously as it still is trying to avoid a full-scale national lockdown.
Hope is to avoid the devastating 9.7% contraction seen in the second quarter of 2020 this time round
Last week, the World Bank in Thailand warned that such an outcome could conceivably hit the Thai economy harder than in April this year which ultimately saw a severe 9.7% contraction in the second quarter.
On Tuesday, a government spokesman said the virus outbreak affecting the kingdom was, in fact, more severe than earlier this year but insisted that both the public and the government was more prepared to deal with what is to come.
He predicted an infection count still in the hundreds per day by mid-January even if the government’s best-case scenario comes to pass with a startling warning that daily infections could extend beyond 10,000 cases per day if things get out of control.
This is the scenario that could be catastrophic for the economy.
Ministry of Finance thinks the country may still be able to hold the economic line against the wave
On Monday last, the Thai Finance Ministry’s Fiscal Policy Office suggested that the economic fallout from the current wave is likely to be less damaging to the economy because of the effective apparatus that is in place currently to deal with the outbreak within the government and the preparedness of the public.
In relation to the outcome for 2020, the spokesperson suggested that the contraction for the year is likely to be closer to 6% compared to 8.3% lately predicted by the World Bank and figures ranging from 6.5% to 8% from among many Bangkok based economic analysts in recent weeks.
World Bank predicts 4.89% growth for 2021
Deputy Prime Minister, Minister for Energy and the government’s economic co-ordinator, Supattanapong Punmeechaow, maintains that a growth rate in excess of 4% is still feasible for Thailand next year and that this could be boosted by the country’s vaccination programme due to take effect in the third quarter.
The current threat of a national lockdown is bound to, however, leave these plans in disarray if it comes to pass.
The World Bank has predicted a 4.89% growth rate for 2021 with a return of mass-market foreign tourism which the finance minister suggests will reach 8 million visitors for the year.
Encouraging news on the economy’s progress into November released on Monday by officials
Fears about the impact of a national lockdown come with the news, delivered last Monday by Executive Director of the Fiscal Policy Office at the Ministry, Pisit Puapan.
He highlighted market improvements with VAT collection, private consumption and consumer confidence throughout November building on gains made in October.
The official noted that the improvement occurred in most parts of the country including the Northeast, Greater Bangkok, Eastern and Southern provinces but that things remained flat in the Western provinces and those to the North.
Value Added Tax receipts were up 2.5%. However, this was still a 6.5% contraction on 2019 figures but it compared favourably to a 9.4% dip from October.
Car sales were up markedly in November from October by 8.7% although down by 7.2% compared to last year. The year on year figure had seen a 25.9% contraction for October.
This is indicative of a market that is quivering back to life after being hammered out of existence earlier this year. Commercial vehicle sales were up for the third consecutive month in a row although the growth was slower than it had been in September and October.
Growth driven by boosted public expenditure
The key information from the latest economic data was a large rise in public expenditure throughout the economy. It rose by over 100% to ฿363.8 billion. This has supported consumer confidence with the spending sentiment index rising to 52.4, the highest seen in 9 months.
Surprisingly, even in a year which has seen a record low in rice exports, farmer’s real income across the country for November was up by 13.6%, something which quickly translates into the overall economy in terms of consumer spending.
About the Author
Joseph O’ Connor is an expat from Ireland who has lived in Thailand for the last decade. He has worked extensively in the media including editorial positions in Ireland and Thailand. He is focused on economic and business stories in Thailand as well as the expat lifestyle. Son Nguyen is an international writer and news commentator specialising in Thai news and current affairs. He commenced working with the Thai Examiner News Desk in May 2018.