Thai GDP to shrink 1.1% this year if virus crisis worsens: CIMBT
CIMB Thai Bank (CIMBT) forecasts Thailand’s GDP will expand about 1 per cent (0.7-1.3 per cent) this year as long as the Covid-19 situation does not worsen.
The forecast comes after the bank cut its GDP projection for next year from 4.2 per cent to 3.2 per cent.
However, Thai GDP could shrink by 1.1 per cent this year and not expand next year if the Covid-19 situation worsens, warns CIMBT’s chief economist Amornthep Chawla.
The bank also cut its forecast for GDP growth in July from 1.3 per cent to 0.4 per cent, following the surge in Covid-19 infections.
Figures for the second quarter of this year show Thailand’s economy grew 7.5 per cent from the same period last year but only 0.4 per cent from the previous quarter.
Amornthep warned the economy might expand slower than expected in the second half amid the worsening outbreak and restrictions on business activities. Economic activities may increase in the fourth quarter but not in the service industry and tourism, he said, citing low vaccination rates and the Delta-driven outbreak as a deterrent to travel.
Meanwhile, private-sector consumption is down on last year, he added.
However, exports offered hope for the Thai economy amid rising demand from the US, Europe and China. Export growth is being seen in automotive parts, electronics, chemicals, processed agricultural products, and processed foods.
The Covid-19 threat to export factories could be minimised by limiting the workforce and continuous testing, said CIMBT.
Turning to the real estate market, Amornthep said demand for new properties is slowing, especially in the condominium market. This would cause property developers to switch focus to horizontal projects.
He proposed that the government borrow another 1 trillion baht to boost the economic recovery in two ways – by investing in public utilities and increasing liquidity among debt-crippled businesses.
He said the Bank of Thailand could also cut its policy rate by 0.25 per cent.
Amornthep said the baht should also be allowed to weaken to 33.50/US dollar if the US Federal Reserve tapers its quantitative easing programme in the third quarter.
The baht could be allowed to strengthen to 33 per dollar when the Covid-19 situation improves in the fourth quarter, which would attract foreign investors and tourists next year, he added.