Standard Chartered Bank forecasts 2 year economic recovery for Thailand
Standard Chartered Bank says that it remains conservative on Thailand’s economic outlook, even though signs are emerging with the possibility of a further policy rate cut to below 0.25%. Their latest report forecasts a return to pre-Covid levels could take more than 2 years depending on improving business sentiment as the economy reopens, noting that the government has been disbursing cash payments to stricken households since April.
The bank forecast Thailand’s 2020 gross domestic product will contract by 5%, (lower than some Thai pundits and Bloomberg, who predict up to 8%), with a sharp contraction of 13% in the second quarter, followed by a gradual correction in Q3 and Q4 this year.
“The export sector is showing signs of recovery and should benefit from China’s resumption of activity and the easing of lockdowns in other markets. Data released in June is likely to confirm a domestic demand recovery after Thailand’s reopening in May. However, we expect the pace of recovery to be slow. Investment is unlikely to recover until next year or later as Covid-19 is likely to exacerbate existing delays in private and government investment and initiatives, keeping the economy below potential.”
Thailand’s first quarter GDP contracted by 1.8% year on year (2.2% contraction quarter on quarter, seasonally adjusted) versus the consensus of a 3.9% contraction on year (4.2% contraction on quarter). This was the first year-on-year contraction since early 2014.
According to Bloomberg, a week ago, “Thailand sees its economy contracting as much as 6% this year, among the worst in Asia, as the coronavirus outbreak cut off travel to the tourism-reliant nation…”
“GDP is forecast to shrink 5%-6% in 2020. The estimate is based on a limited outbreak in the second quarter.”