Thai Manufacturing Sector May Lose at Least USD1.5 Billion amid Coronavirus Crisis in China (Current Issue No.3081)

             The World Health Organization, January 30, 2020, declared that the novel coronavirus (2019 n-CoV) outbreak is a public health emergency of international concern as the virus has spread internationally. In China, the 2019 n-CoV epidemic, which originated in Wuhan, Hubei province, has also spread to other cities, resulting in the lockdown of Taizho and Hangzhou in Zhejiang province while businesses in other cities have been suspended to control the spread of the disease. Such measures warrant close monitoring as they may hurt Thai businesses. 

                 KResearch views that the impact of the 2019 n-CoV outbreak on Thailand will depend on how long it will persist and China's measures to contain the epidemic. As a result, the impact on Thai exports and our manufacturing sector may vary because our exports to China account for 45 percent of the total exports while imports of intermediate products from China account for 46 percent of the total imports.

                 However, if the 2019 n-CoV outbreak in China improves in one month, our exports will only be affected over the short term during 1Q20 or declining USD400-800 million, largely seen in consumer and food products, such as fruit, rice, chicken, shrimp, beverages, canned fruit and canned seafood, due to the sluggish spending in China. However, our exports may gradually pick up afterward. 

                   ​If the 2019n-CoV epidemic persists for 1-3 months, KResearch has preliminary assessed that the impact on the Thai economy may reach at least USD1,500 million. If the outbreak spreads to key economic Chinese cities, prompting the government to close them off, the impact on the Thai economy will likely touch the upper band of our projection at USD6,000 million. That figure includes a loss of USD900-1,500 million worth in exports in line with ebbing purchasing power and manufacturing activities in China, which may in turn undermine our key intermediate product exports, such as electronic equipment and plastic pellets. The 2019 n-CoV outbreak is expected to further hurt Thai exports, which have already been adversely affected by the US-China trade war. In addition, a loss of USD600-4,500 million is foreseen in the Thai manufacturing industry resulting from a shortage of raw material imports from China, in particular those sectors that are heavily dependent on imports from China, namely electronic components for computers, printed circuit boards for automobiles, batteries/primary cells for electrical equipment, inorganic/organic chemicals, auto tires, auto components and car chassis. Businesses related to glass, ceramic and iron manufacturing will also be affected. Our assessments do not take into account economic stimulus measures to be introduced by the Chinese government in the future.