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Thai business groups see economy shrinking 5%-8% this year


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Thai business groups see economy shrinking 5%-8% this year

 

2020-07-01T074308Z_1_LYNXMPEG602WK_RTROPTP_4_THAILAND-BUSINESS.JPG

FILE PHOTO: The skyline of central Bangkok is seen before sunrise in Bangkok April 22, 2015. REUTERS/Athit Perawongmetha

 

BANGKOK (Reuters) - Thailand's economy is expected to contract between 5%-8% this year, deeper than the 3%-5% contraction projected in May, due to the impact of the coronavirus outbreak, a group of the country's leading business associations said on Wednesday.

 

Despite the easing of virus restrictions, most economic indicators declined in May and June, weighed by the weak purchasing power of households and businesses, while tourism remains under pressure, according to a joint standing committee on commerce, industry and banking.

 

"The economy is not good yet and job losses will increase," Kalin Sarasin, chairman of the Thai Chamber of Commerce, told a briefing. "Although businesses started to reopen, there is no income yet".

 

The business group now predicts exports will drop by 7%-10% this year, rather than a 5%-10% declined forecast earlier.

 

The group said it was worried about a recent rise in the baht <THB=TH>, which is likely to appreciate further.

 

The group said it was still pushing the government to take part in Asia-Pacific trade agreement talks to boost the economy, amid widespread opposition.

 

The group plans to hold a seminar on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Thursday.

 

(Reporting by Kitiphong Thaichareon; Writing by Orathai Sriring; Editing by Ed Davies)

 

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-- © Copyright Reuters 2020-07-01
 
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The government must spend big domestically and generate jobs. Take this lull period to move Bangkok out with big scale infrastructure spending. Thailand has to re-model their economy to be less dependent on export. We have a big population that can generate a good domestic economy. Invest on infrastructure that can bolster internal spending and introduce policies to improve the wages of workers. For a start, abolish the minimum wage and allow market forces to dictate wages. Allow those sunset labour intensive industries to fade away or mechanised their operation to be less dependent on cheap labour or move them to poorer provinces. Focus trading with the Indo-China countries which are fast developing and develop the required infrastructures to tap their potential. This government unfortunately has been wrecked by in-fighting and power struggle and have very little talent nor vision. I sincerely think they don't have the competency nor ability to help the economy.   

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It will be a lot more than that.

 

If tourism is 15-20% of the economy and that is 80% down then you're already above that figure on tourism alone. Not to mention the extremely poor harvest due to the drought and the effect of decreased external demand for Thai exports and decreased domestic demand for almost everything. 

 

You can double the 5-8% drop easily. Most likely even worse than that.

 

 

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2 hours ago, Eric Loh said:

The government must spend big domestically and generate jobs. Take this lull period to move Bangkok out with big scale infrastructure spending. Thailand has to re-model their economy to be less dependent on export. We have a big population that can generate a good domestic economy. Invest on infrastructure that can bolster internal spending and introduce policies to improve the wages of workers. For a start, abolish the minimum wage and allow market forces to dictate wages. Allow those sunset labour intensive industries to fade away or mechanised their operation to be less dependent on cheap labour or move them to poorer provinces. Focus trading with the Indo-China countries which are fast developing and develop the required infrastructures to tap their potential. This government unfortunately has been wrecked by in-fighting and power struggle and have very little talent nor vision. I sincerely think they don't have the competency nor ability to help the economy.   

Domestic spending would be good, but consumers are already up their eyeballs in debt and that is set to get worse.  Your prescription for exports might work if it were only Thailand in recession, but there is going to be weak global demand.  Also, peer countries are more competitive.

 

Yes, the Government needs to borrow big, and develop green industry- the spending would not only stimulate the domestic, but also the extra borrowing required would reduce the value of the baht considerably.  I doubt this type of government would ever stomach the extra 30-40% added to the public debt GDP ratio, which is the only medicine almost certain to work.  It's just antithetic to their beliefs.  

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3 hours ago, Eric Loh said:

Focus trading with the Indo-China countries which are fast developing and develop the required infrastructures to tap their potential.

So, would the Chinese bullet train (75% of which will be built by the Chinese) qualify as an infrastructure improvement?  Not sure how that could help Thailand.

 

 

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2 hours ago, Isaan sailor said:

So, would the Chinese bullet train (75% of which will be built by the Chinese) qualify as an infrastructure improvement?  Not sure how that could help Thailand.

 

 

Not really a bullet train but rather a high-speed train network; part of the road & belt project. Politics aside, it is a good project for the land-locked Indo-China hinterland as well as the provinces in South West China as it provides trading opportunities and movement of goods and services. There is another train project between Thailand and Mynmar which has been stalled numerous times. I think due to series of government changes in Thailand. This will benefit immensely for both countries as Mynmar deep sea ports are few. I feel that Thailand can play an key role being the center of commerce and trading hub for hinterland countries just like Singapore in the 60s which was the center of trade for Malaysia and Indonesia. Just need good visionaires in the government who recognize the potential and do something about it. Not this junta government unfortunately. Too much self interest and corruption.                                                 

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