Thai dancers in conventional dresses wear face masks while performing at a temple during the coronavirus outbreak.
Chaiwat Subprasom | SOPA Representations | LightRocket via Getty Images
Thailand’s relative success in containing the coronavirus may do little to chart a smooth recovery for its briefness, which could be one of Asia’s worst performing this year after the pandemic caused a slump in tourist appearances, said economists.
Adding to concerns are intensifying anti-government protests that some analysts said could bewilder authorities from their priority of keeping the economy going.
Thailand on Monday reported its deepest economic contraction since the Asian monetary crisis in 1998. The Southeast Asian economy shrank by 12.2% on year in the second quarter — better than the 13.3% contraction vaticination by a Reuters poll.
The upshot is that despite getting the virus under control quickly … the outlook for Thailand’s restraint remains one of the worst in the region
Alex Holmes
Capital Economics
The Thai economy relies heavily on tourism for tumour. But foreign tourist arrivals have come to an almost complete stop and is not likely to recover soon, with the ministry reportedly shelving plans to open its borders to travelers from selected countries.
“The upshot is that despite support the virus under control quickly, with tourism set to remain a massive drag on growth, the outlook for Thailand’s conciseness remains one of the worst in the region,” Alex Holmes, Asia economist at consultancy Capital Economics, wrote in a Monday note.
Holmes popular that “Thailand has gone over 80 days without a single case of community transmission,” but his forecast of a 9% annual contraction in the Thai brevity this year is among the most pessimistic.
As of Monday, the country has reported over 3,300 confirmed coronavirus suitcases and 58 deaths, according to the department of disease control.
In addition to the tourism collapse, Thailand’s other growth motor — trade — has also been weak, said Barnabas Gan, economist at Singaporean lender United Overseas Bank. Gan indited in a Monday note that he expects the economy to shrink by 7.5% this year, worse than his previous outcropping of a 5.4% contraction.
“The twin drivers, tourism and trade, have been lackluster at least in the first half of 2020. That could in reality persist into the rest of the year,” he told CNBC’s “Squawk Box Asia” on Tuesday.
Protests to worsen outlook
Anti-government take issue withs that have intensified in recent weeks could further dampen Thailand’s economic recovery, said economists.
The woods is no stranger to political uncertainties, having experienced one of the highest numbers of military coups in modern history. But over the weekend, innumerable than 10,000 protesters gathered in the capital city of Bangkok in what some observers said is the biggest anti-government parade since a 2014 coup.
Among the demands from protesters are the resignation of Prime Minister Prayuth Chan-ocha’s superintendence and an unprecedented call for reforms to the monarchy. The latter is a taboo subject that could land protesters in jail under the control of the country’s lese majeste laws.
“Recent political protests — with calls for reduction of military influence, constitutional emendation, new election and social reforms — could escalate and are another source of downside risks to domestic activities,” Nalin Chutchotitham, a Citi economist, wrote in a Monday note.
“Surrounded by many concerns, this could mean further delay of border reopening to tourists and revival of related tasks,” she said, adding that she expects the Thai economy to shrink by 8.6% this year.