The coronavirus epidemic, the delayed fiscal budget and the ongoing drought are estimated to shave nearly 280 billion baht off GDP, taking economic growth down to a range of 1.7-2.1%, according to TMB Analytics.
Of the total, 150 billion baht is expected to be economic damage from the deadly virus to Thailand's tourism and export sectors, 66 billion worth of state investment stalled by the delay in the annual budget bill, and 60 billion lost from the worst drought in decades, the research house under TMB Bank said.
The coronavirus spread is predicted to have the largest effect on Chinese tourist arrivals and merchandise outbound shipments to China in the first quarter, it said.
TMB Analytics forecast foreign tourist arrivals of 38.7 million in 2020.
The research unit earlier predicted economic growth would come in at 2.7% this year.
A raft of government stimulus measures is estimated to add a mere 0.2 percentage points to the country's economic growth, TMB Analytics said.
Join the bandwagon
Siam Commercial Bank's Economic Intelligence Center (EIC) also jumped on the bandwagon, slashing economic growth to 2.1% from 2.7% after taking into account the coronavirus epidemic and the delayed fiscal budget.
The biggest impact from the outbreak of the novel coronavirus on Thailand's tourism sector will be seen this month and next, the research unit said.
The number of foreign travellers is estimated to drop for three straight months in the better-case scenario, four months in the base-case scenario and six in the worst-case assumption, resulting in a contraction of 2.5%, 4.6% or 8.1%, respectively, in 2020, the EIC said.
The coronavirus will also slow China's economy this year, threatening the global economic recovery and dealing a blow to supply chains in the period ahead.
In the EIC's base-case scenario, Thailand's export value is forecast to shrink by 1% this year, down from 0.2% growth predicted earlier.
The forecasts from TMB Analytics and EIC are far below policymakers' views. The Bank of Thailand and the Fiscal Policy Office predict GDP growth of 2.8% this year.
Apart from the Sars-like virus outbreak, the delay in the fiscal 2020 budget bill will hurt public investment in the three months to March.
The government is expected to hasten budget disbursement to shore up the economy after the budget bill is implemented. But the months-long delay can't be completely offset, and state investment growth is now projected at 3.9% in 2020, down from an earlier 5.6% estimate, the EIC said.
Meanwhile, Pipat Luengnaruemit-chai, assistant managing director, chief economist and co-head of CIO Office Phatra Securities, said his firm has downgraded the economic outlook this year from 2.8% to 2.2% on the heels of two new factors: the novel coronavirus and the delayed fiscal budget.
The persistent drought will also dampen the country's growth, he said.
The virus outbreak is spreading at a faster speed and larger scale than Sars in 2003.
He agreed with TMB Analytics and EIC that the coronavirus impact would deal hard blows to the Thai tourism sector this quarter.
Tourism income contributes 12% to GDP, while Chinese tourists represent 28% of Thailand's foreign arrivals.
"China banning outbound tour groups for one month would wipe 0.15 percentage points off Thailand's GDP, so the issue warrants further monitoring," said Mr Pipat.
Phatra Securities estimated Thai economic growth would be flat on a quarterly basis in the first three months this year, though it would shrink if the outbreak is prolonged or expands on a larger scale.