The Thai economic performance, which has already been plagued by the ongoing trade war, anemic global economy and severe drought in the country, is being further undermined by the current COVID-19 outbreak. Given this, Thailand's GDP grew at less than our prior estimates at 1.6 percent p.a. during 4Q19 and 2.4 percent in 2019. Due to the impact of the COVID-19 epidemic, domestic economic activities have deteriorated rapidly, with tourism receipts plunging approximately THB220 billion. The Thai export and import sectors, with supply chains closely linked with China, have also been adversely affected by production suspension seen in most factories in China. As a result, GPD growth will likely be stagnant during 1Q20.
In order for the Thai GDP to grow at least 2.0 percent in 2020, the implementation of both fiscal and monetary policies are most needed. While the 2020 Budget Act cannot be enforced between February and March 2020, the implementation of monetary measures must be accelerated to help bolster liquidity for businesses, which in turn may help sustain income and employment in the household sector overall. Meanwhile, the government has gradually introduced a number of monetary measures, with the aim of ensuring that businesses have adequate liquidity. However, additional liquidity is needed to stimulate economic activities further. For the Thai GDP to expand at least 2.0 percent in 2020, approximately THB100 billion in new liquidity is required under the condition that the COVID-19 outbreak can be contained during 1Q20.
We at KResearch have preliminarily assessed that Thailand's 2020 GDP will grow at less than the lower end of our projection band of 2.5-3.0 percent. It is still possible that the Thai economy can grow 2.0 percent if the public sector inject some THB100 billion into the economic system during the remainder of 2020. KResearch is scheduled to review our 2020 Thai economic growth projection on March 16, 2020.