ADB predicts steeper GDP contraction
The Thai economy is estimated to shrink by 6.5% this year, eroding from a 4.8% contraction seen previously, as the coronavirus pandemic takes a toll on domestic consumption and investment and pummels outbound merchandise and services, says the Asian Development Bank (ADB).
If the ADB's forecast comes to pass, Thailand will have the deepest contraction in Asean.
The Manila-based lender sees the economy rebounding to growth of 3.5% next year, up from 2.5% projected in April.
The ADB's latest forecast for 2020 is more pessimistic than the Bank of Thailand's projection of a 5.3% contraction, but the central bank is set to revise its estimate on June 24.
Singapore is predicted to be the second-worst performer in Asean this year with a 6% slump, followed by Cambodia with a 5.5% dip and Malaysia with a 4% contraction.
On the other end of the scale, Vietnam is tipped to perform the best in the region with 4.1% growth this year, followed by Myanmar with 1.8% and Brunei with 1.4%.
Economic activity in Southeast Asia is expected to contract by 2.7% this year before growing by 5.2% in 2021, the ADB said.
Krungsri Research is maintaining its forecast of a 5% contraction this year, but the economy is expected to take two and a half years to recover to pre-pandemic levels, said chief economist Somprawin Manprasert.
A U-shaped recovery is expected for Thailand, he said.
"The odds are that the economy will bounce back slowly and the business sector will start to adapt to the new trends in 2021," Mr Somprawin said.
The pandemic will hit economic activity not just in the short term, but also medium- to long-term performance, given business closures from the recent lockdown, ebbing demand, disruptions in the global supply chain and shifts in consumer behaviour, he said.
Businesses hurt by the lockdown can bounce back faster than those dealing with changes in consumer behaviour, Mr Somprawin said.
Krungsri Research estimates that 26 out of 60 business sectors in Thailand have been harmed by the viral outbreak. The 26 sectors account for 46% of the country's total output.
The 24 sectors are experiencing a moderate effect, while the remainder have been mildly disturbed, Mr Somprawin said.
The research house predicts that hospitals and food business will be able to bounce back to pre-virus levels next year, while retail and wholesale, power and natural gas have been ravaged but can recover at a faster pace than other segments.
Aviation and sectors related to public gatherings will take a longer time than others to recover, Mr Somprawin said.
"We forecast the global economy to reach the bottom in the second quarter, but the global recession will last until next year," he said.