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6 Mar 2020

Thai Economy

2020 Thai Economy to Grow at the Slowest Pace in 11 Years due to COVID-19 Outbreak (Business Brief No.3853)


             The novel coronavirus (COVID-19) outbreak is set to be severe and spread broadly around the globe after new infections outside of China, in particular South Korea, Italy and Iran have surged. So far, the number of confirmed COVID-19 cases has reached more than 90,000 in over 70 countries and territories worldwide.

Regarding the impact of the COVID-19 epidemic on the Thai economy, since the outbreak outside of China is at a critical juncture and set to persist beyond 1Q20, we at KResearch have conducted an assessment on the COVID-19 outbreak at home and abroad to be used as part of our assumptions for the 2020 Thai economic growth forecast as follows:

  1. The number of infections in China will be contained over the next 1-2 months without any reemergence of the virus outbreak.
  2. The COVID-19 outbreak in other countries, where there has been a rapid spread of the virus, will be contained by 2Q20.
  3. The number of infections in Thailand will not increase rapidly over the short term.

                 ​Under such assumptions, KResearch has decided to revise our 2020 growth forecast for the Thai economy to 0.5 percent from the prior estimate of 2.7 percent. The new projection takes into account various economic stimuli implemented by the government to ease the short-term economic impact. Meanwhile, public spending will likely be a key factor helping maintain Thai economic performance during 2020. Although our 2020 growth forecast for the Thai economy at 0.5 percent represents the slowest growth since the US subprime mortgage crisis in 2009 amid risk that Thailand may experience a technical recession, based on a quarter-on-quarter economic contraction during 1H20, the economic situation this time around has been caused by natural factors, rather than a structural factor as that of the 1997 financial crisis. As a result, we expect that the Thai economy may rebound quickly after the COVID-19 outbreak has eased. Therefore, if the COVID-19 epidemic evolves per our assumptions, the Thai economy will likely resume growth during 2H20.