Summary: Thailand’s Economic and COVID-19 Outlook
Dr. Pipat Luengnaruemitchai, Chief Economist, KKP Research, Kiatnakin Phatra Securities Public Company Limited, revealed that
“Kiatnakin Phatra Securities assessed that due to a delayed vaccinations and inability to secure sufficient vaccine supplies, only 5% of the total population in Thailand is now fully vaccinated and 35% is predicted to receive two doses of coronavirus vaccines by the end of the year. As a result, the outbreak and lockdown measures are likely to go on for at least another three months. In the base-case scenario, the GDP growth forecast for 2021 is downgraded to 0.5%. In worst-case scenario where the pandemic becomes more severe and the lockdown is extended or stricter measures are imposed affecting manufacturing activities across the country, the economy could shrink by 0.8% and enter another recession.
Nationwide and prolonged disruption of economic activities triggered by the third wave of COVID-19 will severely affect the livelihood, employment, cash flow, financial condition, and ability to meet financial obligations of families and SMEs. The government should (1) carefully plan the implementation of lockdown measures consistent with the changing situation and public health capacity and communicate the measures in a transparent manner, (2) scale up diagnostic testing, treatment, and procurement of effective vaccines, (3) issue relief and assistance measures that are adequate and appropriate to current circumstances, (4) stimulate and restructure the economy to prevent permanent economic scarring, and (5) maintain trust and stability in the financial system. Although the public debt-to-GDP ratio is approaching the threshold of 60% and is expected to exceed this threshold in 2022, the government is still able to increase its debt with the reduced interest rate, if necessary. Moreover, the government must reduce future deficits to maintain trust and fiscal discipline by reprioritizing expenditure and reducing unnecessary spending.
