Thailand's economic contraction is forecast to see a double-digit plunge this quarter, with a hard landing scenario in private consumption and tourism, says Asia Plus Securities (ASP).
The economy is projected to tumble by 11% as the emergency decree and social distancing measures, aimed at containing the virus outbreak, have taken a toll on economic activities, especially consumption and tourism, said Takit Chardcherdsak, assistant equity analyst at ASP.
"Three facets to consider in June are the global number of Covid-19 infections, which have already surpassed 6 million people; the success of vaccine development, where there are four stages of progress; and the global trade war," said Mr Takit.
He said the virus outbreaks in the US, France, Spain and Italy seem to have passed their peaks, but cases in Brazil, Russia, India and Chile warrant a close watch as the average infection rate remains high.
The economy got off to a grim start this quarter after experiencing a 1.8% year-on-year contraction in the first quarter, with several economic indicators posting the worst levels on record for an April, according to Bank of Thailand data.
With an inbound travel ban adopted to contain the coronavirus outbreak, no foreign tourists arrived in April and May, said Don Nakornthab, senior director of the economics and policy department at the central bank.
Tourism-related businesses, especially hotels, restaurants and passenger transport, bore the brunt.
Private consumption dipped 15.1% year-on-year in April, marking a record low.
The contraction, seen across spending categories, resulted from rising unemployment, lower income and weak consumer confidence, coupled with the postponement of Songkran holidays and lockdown measures.
Thailand's economy is expected to see continuous quarterly contractions in the second half, albeit at lower ratios, because of the fragile economic recovery reeling from the Covid-19 crisis, said Mr Takit.
GDP contractions are anticipated at -6% in the third quarter and -4.5% in the final quarter, according to ASP.
The securities firm has cut its annual growth forecast for Thailand to -5.7% from -1.4%, mainly because of the reemergence US-China trade disputes and the pandemic. The economy is forecast to expand by 4.7% next year supported by government stimulus measures and record-low interest rates.
Therdsak Taveeteeratham, executive vice-president of research at ASP, said investors should be careful of three traps: the performance of SET-listed companies, a high price-to-earnings ratio and possible fund outflows from foreign and local institutional investors.
"The market sentiment is looking over this year's performance to trade in line with the outlook of profit and performance anticipated for next year," said Mr Therdsak.