Trade credit insurer Atradius has published a new country report on Thailand.
The new report forecasts a sharp economic slowdown for Thailand in 2020 with GDP expected to shrink by more than 5%. However, the future outlook currently signals a potential rebound next year.
According to Atradius, going into 2020, Thailand’s economy was already showing signs of weakness during 2019 with GDP growth decreasing to 2.4%. While household consumption remained robust, growth in fixed investment slowed and industrial production and exports contracted by 3.8% and 2.6% respectively, weighed down by sluggish global trade, US-China trade tensions and the strength of local currency, the Thai baht.
The report, published on the Atradius website publication pages, indicates that the Covid-19 pandemic has led to a severe contraction in economic activity. Exports, predominantly electronics and automotive, are forecast to fall by more than 15% this year, hit by supply chain disruption and deteriorating external demand. Meanwhile, industrial production is expected to decrease by more than 10%, with automotive and electronics sectors value added forecast to contract 12% each.
Covid-19 containment measures and the consequent disruption to tourism has hit domestic demand; private consumption is forecast to shrink by about 5% with rising unemployment and high household debt limiting additional spending.
Despite the drop in GDP expected for 2020, Atradius forecasts that Thailand’s economy will rebound by about 7% in 2021 – subject to the assumption that the Covid-19 pandemic will be contained this year allowing the global economy to begin to recover.
The risks to the long-term recovery include a GDP growth rate which is lower than neighbouring economies, high household debt and a decrease in market competitiveness due to higher wage levels compared to a number of other markets. In addition, the share of the working-age population is forecast to decrease from 65% in 2020 to 56% by 2040, which is likely to impact economic growth in the long term.