COVID-19 will be contained, but how well will Thailand cope with the economic fallout caused by the virus outbreak?
According to Dr. Thanawat Phonwichai, one of Thailand’s leading economists and president of the University of Thai Chamber of Commerce, the 1.9 trillion baht government stimulus package is the right amount to rehabilitate the Thai economy.
That is, if the outbreak is contained within the first half of the year and business resumes.
With the virus contained over the next two months and business resumed, Dr. Thanawat estimated the Thai economy would lose one to 1.5 trillion baht in the first half of 2020.
But if the tourism sector doesn’t recover in the third quarter of this year, the economy may take another 500 billion baht hit.
Therefore, economic damage through the first three quarters could be anywhere between one to 2.5 trillion baht.
“Roughly, the damages could be around two trillion baht, so the 1.9 trillion baht package is just enough to prop up the economy,” said Dr. Thanawat.
However, he cautioned that the longer the outbreak lasts, the larger the economic damage will be.
“It depends on when the outbreak will end,” he said.
Based on the Wuhan Model, China took two-and-half months to contain the spread. Meanwhile, the situations in Europe and the United States are still worrying. Thailand’s economic recovery also depends on the global market, especially as a country that relies heavily on exports and tourism.
However within Thailand itself, Dr. Thanawat believes that the sooner the government relaxes its restrictions on businesses, such as allowing malls, shops and restaurants to open, the faster the recovery will be.
But again, this depends on when the virus is contained.
Of the stimulus package, the Bank of Thailand will use 500 billion baht to support small and medium-sized businesses and 400 billion baht to stabilize the financial market.
The remaining one trillion will be divided into two portions.
- Around 600 billion baht for implementing health-related plans and financial assistance for affected people.
- Around 400 billion baht for economic and social rehabilitation.
Dr. Thanawat also said the government still has other budgets that can be put to help stimulate the economy.
“The economy will definitely contract this year,” he said. “But the speed of recovery will depend on when the virus is contained and the specific measures the government will use for the 1.9 trillion baht package.”