The impact of COVID-19 has been negative for Thailand’s export- and tourism-reliant economy. According to Thailand’s Fiscal Policy Office, the Thai GDP is forecast to contract by -8.5% this year. In July, however, the Thai economy showed some signs of improvements driven by public spending and the relaxation of lockdown measures both in Thailand and abroad. In July 2020, private consumption indicators, merchandise export value and manufacturing production exhibited lighter contractions.
Private consumption indicators marked softer contractions as compared to the previous month. Improvement in almost all spending categories were seen as lockdown measures were eased coupled with a temporary factor of extended weekends.
The value of merchandise exports contracted by 11.9% from the same period last year, showing a lesser contraction relative to the previous month as exports in several categories improved, such as automotive and parts, machinery and equipment and electronics, in line with the resumption of economic activities in trading partner countries after lockdown measures were eased in various parts of the world.
Manufacturing production contracted at a lower rate in almost all categories, aligning with the uptick in private consumption and merchandise exports.
The value of merchandise imports, however, contracted by 25.4% from the same period last year, with sharper contractions in all categories of products as compared to the previous month. In terms of foreign tourist arrivals, the country received no new arrivals for the fourth consecutive months as international travel restrictions remained in place.
The government of Thailand so far has implemented four COVID-19 stimulus packages worth a total of 14.5% of GDP. Over half of this forms real or on-budget spending, and the rest comes as monetary support including soft loans, market stabilization measures, debt moratorium, among others.
(Source: Bank of Thailand, ING)