Siam Commercial Bank's Economic Intelligence Centre (EIC) has warned Thailand is on course for a technical recession in the first half of the year as the centre cuts its 2020 GDP forecast for the country to -0.3% from the previous 1.8% due to the increasing gravity of the Covid-19 epidemic.
The global economy is forecast to slow further due to the weakened economies of China and major countries, particularly in Europe, suffering outbreaks of the virus, the centre said.
According to the centre's projection, the Thai economy in the first and second quarters of this year will shrink in terms of seasonally adjusted quarter-on-quarter growth and year-on-year growth due to several factors such as the declining number of tourists, the export sector hit by Covid-19, the severe drought, and the delayed enactment of the 2020 budget bill.
However, the speedy disbursement of the budgets for state investment and stimulus measures will help shore up the economy from the second quarter onwards.
The EIC has predicted the economy will gradually improve at the end of the third quarter, with foreign tourist arrivals forecast to return and more relaxed financial measures in place to support the economy.
The impact of Covid-19, which has been declared a global pandemic by the World Health Organisation, has been predicted to cause foreign tourist arrivals to drop to 27.7 million (-30.5% year-on-year) from 37 million, according to the EIC.
The EIC has also slashed Thai export values from -1.0% to -5.8% as exports continued to slow as a result of the Covid-19's impact on the global economy.
Also, a risk of supply chain disruption brought on by the Covid-19 outbreak and falling oil prices could further pressure exports. The EIC has also predicted that domestic spending will lower amid growing concerns about the gravity of the virus outbreak.
