Even without the issue of the COVID-19 pandemic, the overall Thai economy was already in a "fragile" state. However, as the coronavirus spreads widely, the impact on the economy has intensified.

As we enter the last month of the first quarter, we can see the state of the "Thai economy" during this period. At this point, we must acknowledge that the various situations appear to be "worse" than many economic research agencies had predicted. No one anticipated that the outbreak of the new coronavirus, or "COVID-19," would expand globally. What we need to monitor now is how each country will respond, especially among major economies. If these countries experience a significant economic slowdown, the repercussions on the Thai economy will likely be severe.

At the end of last week, "Moody's Analytics" released its latest report, estimating a 40% chance that this new strain of the virus will become a global pandemic, which would affect a large number of people. If the situation unfolds as Moody's predicts, there is a high risk that the global economy and the U.S. economy will enter a recession in the first half of this year. Given that the global economy is already in a "fragile" state due to the effects of the trade war between the U.S. and China, this new risk could accelerate the global economy's slide into recession.

As for the "Thai economy," if the world enters a recession, it will be difficult to avoid such a situation. The economic figures for January 2020, recently announced by the Bank of Thailand (BOT), show no signs of recovery. Even though the outbreak of "COVID-19" only intensified in late January, the tourism figures for that month grew by 2.5% compared to the same period last year, while other indicators continued to show a "contraction."

The figures for private sector investment are particularly clear, as they have been continuously contracting compared to the same period last year, due to slowing demand both domestically and internationally. Production capacity remains high, coupled with business confidence that is still not very strong. While exports overall grew by 3.5%, most of this was due to gold exports. If we exclude this, exports for that month actually "contracted" by 1.3%. Although private consumption seemed to improve recently, in January 2020, growth began to slow compared to the same period last year. These indicators reflect that even without the COVID-19 outbreak, the Thai economy was already in a "fragile" state.

A major concern is that the "COVID-19" outbreak is not limited to China anymore; it is spreading globally. The impact is no longer confined to Chinese tourists, as many countries are beginning to issue travel warnings. Importantly, these issues are starting to "spill over" into the "manufacturing sector," as some factories are unable to produce goods due to disruptions in the global supply chain. Small companies with limited resources are beginning to shut down. These impacts are cascading into the consumption sector, and various negative factors are coalescing into a "great storm" that is set to hit the Thai economy. At this point, each company must ask itself whether it is prepared to face this challenge!

SOURCE : www.bangkokbiznews.com