Although the Bank of Thailand's Monetary Policy Committee (MPC) has revised its economic forecast for Thailand in 2020 to a contraction of 7.8% from the previous estimate of 8.1%, it has also lowered the growth forecast for 2021 to 3.6% from 5%. This reflects that the Thai economy is still in a difficult situation, and the key to recovery must focus on increasing reliance on the domestic economy and revitalizing it from the ground up.

Last week, the Bank of Thailand (BOT), through the Monetary Policy Committee (MPC), adjusted its "forecast" for the Thai economy in 2020 to a "less severe contraction" of 7.8% from the earlier prediction of 8.1%. While this might suggest that the Thai economy is "improving," a look at the revised economic forecast for 2021 shows that we should temper this optimism, as the MPC has reduced its forecast for "growth" in the Thai economy next year to 3.6% from the previous estimate of 5%.

The MPC's new forecast indicates that it views the Thai economy over the next two years (2020-2021) as "worse than expected," with the average contraction over the two years now projected at about 2.1% per year, compared to the previous average of 1.55%. The main reason for this is that we have not been able to fully "open the country," leading to a significantly slower recovery in the number of tourists entering Thailand. The MPC has revised the number of foreign tourists expected to visit Thailand down to 9 million from the earlier estimate of 16.2 million.

The anticipated number of foreign tourists is now significantly "lower" than the previous estimate, which will undoubtedly impact domestic "consumption" in unavoidable ways. As a result, we see the MPC "lowering" the growth forecast for private consumption next year to 2% from the earlier estimate of 2.5%. The slow recovery of foreign tourists will affect the tourism industry, which has been a key driver of the Thai economy. It is crucial to monitor how the tourism industry, which is expected to recover slower than anticipated, will impact the "businesses" within this sector. Companies with limited resources and liquidity may have to "shut down," leading to an increase in unemployment, which is an issue the government must address seriously.

Looking back to previous years, the low prices of agricultural products, especially "rice," forced labor in the "agricultural sector" to shift to work in the "service sector" due to the continuous increase in foreign tourists, which invigorated the economy in the service sector. However, the service sector is now facing severe impacts from the COVID-19 crisis, with many businesses starting to close, forcing some of this labor group to return to the "agricultural sector." This presents a challenging issue for the "government" on how to support this labor group, especially considering the current prices of agricultural products, which are equally concerning.

Agricultural product prices, particularly "rice," have been steadily increasing during the second quarter and into early September, but recently the "prices" have begun to "plummet" due to an excess supply. If the price situation continues to decline, food security will become a pressing issue again. We hope the government will closely monitor these matters, and their support should not only focus on prices but also encompass public utilities and the necessary infrastructure for agriculture. Because even if agricultural product prices improve, if farmers lack water for irrigation, production will not occur, and the problems will revert to where they started. The COVID-19 crisis has highlighted the need to rely more on the domestic economy, making it crucial for the government to prioritize sustainable solutions for the agricultural sector and revitalize the economy from the ground up!

SOURCE : www.bangkokbiznews.com