BoT warns of GDP growth below 1%
Odds of technical recession depend on how long coronavirus spreads, says bank official
The Bank of Thailand says the economy is likely to expand by less than 1% in 2020 if the coronavirus outbreak lasts throughout the year, says a central bank senior official.
If the virus continues to spread for the entire year, which is longer than the central bank's base-case scenario, GDP growth could be lower than 1%, said Don Nakornthab, the senior director of the economic and policy department in the monetary policy group.
Commenting on the possibility that Thailand will slip into a technical recession, he said it depends on how long the virus spreads.
"A recession could occur, but we would need to consider the economic data comprehensively," Mr Don said.
The Bank of Thailand expects the economy to hit a trough this quarter, he said, assuming that the virus spread continues over the next few months before it is stopped.
Economic growth will sink dramatically in February as foreign tourist arrivals declined by about 45% from a year earlier.
The tourism sector, which accounted for 11.1% of GDP in 2019 and was the growth engine in recent years, is bearing the brunt of the virus outbreak.
Mr Don said the outbreak in Thailand could enter a third stage but its impact is not worrisome, as the country has managed to contain the number of infections in the second stage now.
The central bank last December downgraded its 2020 economic growth outlook to 2.8% from 3.3% seen previously and planned to review its forecast on March 25.
Mr Don said China, the epicentre of the outbreak, has started to contain the spread and some of its economic areas are picking up, but the number of infections outside of China has spiked.
In January, tourist arrivals expanded at a steady pace compared with the previous month at 2.5%, mainly due to the increase in the number of tourists from Malaysia, Russia and Hong Kong during the Lunar New Year.
Foreign tourist arrivals in January totalled 3.8 million.
Mr Don said the number of Chinese tourists plunged 90% in January from the previous month as the Chinese government banned outbound group tours in a bid to contain the epidemic and labour market vulnerability increased amid rising unemployment.
Thailand's economy in the first month continued in a decelerating trend. The value of merchandise exports excluding gold shrank by 1.3% after a 0.9% contraction in the previous month.
But Thailand is the sole country in Asean that saw exports including gold turn around, with 3.5% growth in January.
Manufacturing, private investment and public spending continued to fall last month.
Private consumption expanded, albeit at a slower pace, and farm income accelerated.
Apart from the coronavirus epidemic, the central bank will further monitor drought conditions and delayed fiscal 2020 budget disbursement, Mr Don said.
The drought is getting worse, with the water level of rainfall and dams in crisis.
The enactment of the fiscal 2020 budget law, however, will help support domestic spending, as budget disbursement is expected to take place in the second quarter this year.