Coronavirus outbreak to hit many sectors of Thai economy
The increasing number of new coronavirus cases is expected to take a toll on the Thai economy, with not just tourism but manufacturing, exports, retail and agricultural sectors also feeling the pinch, an economist warned while calling on the central bank to cut its key policy rate to shore up the economy.
Anusorn Tamajai, director of the Economic and Business Research Centre at Rangsit University, warned that the impact of the coronavirus outbreak is expected to be significant as countries close borders, impose travel restrictions and businesses shut down factories in an attempt to contain the spread of China’s new coronavirus.
The death toll has crossed 300 while more than 14,000 patients worldwide are infected by the virus.
The impact will go beyond the tourism industry to manufacturing, exports and the agricultural sectors. It is likely to alter the global geopolitical setting, he warned.
Thailand exports agricultural products worth Bt900 billion to China annually. The impact of the virus outbreak is expected to reduce these exports by 1 to 2 per cent, he said. Five major farm products are: fresh, frozen and dried fruit worth Bt65.5 billion; rubber products worth Bt50.1 billion; tapioca products worth Bt42.3 billion; rice worth Bt9.3 billion and frozen chicken worth Bt6.9 billion. The anticipated export slowdown is expected to depress the prices of some farm products in the next few months, he noted.
As multinational firms close their plants and offices in China, the impact would be felt by supply chains worldwide in the fields of high-tech, electronics, auto and parts. For example, iPhone has announced the launch of a new mobile phone model. Import of raw materials in Thailand are also adversely affected and some factories have temporarily closed operations in Thailand. For example Sica New Materials (Thailand) has shuttered its plant in Thailand without advance notice or compensation to workers, he pointed out.
Retail businesses in Thailand would also be adversely affected, but e-commerce trade and logistics may expand, he said.
To shore up the Thai economy, the central bank would need to lower its policy rate to 1 per cent from 1.25 per cent currently, he said, pointing to the meeting of the Bank of Thailand’s Monetary Policy Committee this week.
He suggested that the Thai government may need to require Chinese tourists to apply for visas, which would let the authorities consider whether a particular tourist should be allowed to visit the country. Due to the delicate situation, travel restriction measures will likely impact relationships between countries, he acknowledged. An estimated million people are locked down in China and a lot of people may be angry with the Chinese government, he said.
The United States, Australia and Singapore have banned foreign nationals who have visited China in the past 14 days from entering their countries while Japan has banned foreigners who have visited Hubei province in China from entry into the country.
The World Health Organisation (WHO), however, has warned that travel bans will disrupt the global economy. The WHO, which on Thursday announced the outbreak of a global health emergency, also warned that a travel ban may not be effective in combating the coronavirus from spreading and people may go underground. It suggested that countries step up screening people to find infected people rather than imposing entry bans.