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Thailand: JP Morgan upgrades contraction view to -3%
Thailand’s GDP contraction is expected to be less severe because of the resumption of economic activity, but the government should be more assertive in shoring up public and private consumption to compensate depressed exports and tourism, says JP Morgan Thailand.
The full-year economic contraction has been upgraded to -3% from -9%, as the easing of lockdown measures helped businesses resume operations, said ML Chayotid Kridakon, senior country officer of JP Morgan Thailand.
The country’s strength in public health and handling the Covid-19 crisis is also a boon for recovery momentum, ML Chayotid said.
Thailand’s total cases of infection stood at 3,564 as of yesterday. Of the total, 3,374 (94.6%) have recovered and 131 remain in hospital. The death toll is unchanged at 59.
Since exports and tourism are still battered by the pandemic and will take time to return to normal, domestic consumption and government spending are the two remaining engines boosting recovery momentum, ML Chayotid said.
The government is advised to launch new measures to stimulate domestic consumption and speed up government spending in infrastructure projects, he said.
Birgit Hansl, the World Bank’s country manager for Thailand, recently remarked that only 4% of GDP was actually injected into the economy from a stimulus package making up 8-13% of GDP.
Some stimulus measures, such as the 3,000-baht cash handout per person, were not directed to the targeted segment and the government should find a method to distribute money to reach households more efficiently, Ms Hansl said.
With drastic changes in the economic landscape ushered in by the Covid-19 crisis, the government should devise strategies to support the post-pandemic economy and deliver new investment products on the the Stock Exchange of Thailand (SET), as the country still relies on traditional economic sectors, ML Chayotid said.
Businesses that can adapt to the new economic norms will be the beneficiaries of this crisis, he said.
For the Thai stock market, SET-listed firms’ performance in the third quarter reflects the business outlook. Exports and tourism have yet to recover, while the recovery of farm and consumer products will have to be monitored further, ML Chayotid said.
“In the past, we were a factory for the world with labour advantages,” he said. “[But] if we still can’t move on from this point, the attractiveness of the Thai stock market is gradually declining. However, I personally believe that the private sector is good enough to adapt to changes in global demand.
“You can see there are not many Thai technology companies. The government should have a policy to push forward in this area or use a method to entice the world’s largest tech companies to set up their headquarters in Thailand. This would help enhance local businesses to a world-class standard.”
Source: https://www.bangkokpost.com/business/1994567/jp-morgan-upgrades-contraction-view-to-3-