CIMB Thai expects Thai GDP in 2021 to be 0.4%
Date 22 Aug 2021 time 11:34
CIMB Thai expects Thailand’s GDP in 2021 to be 0.4%, fearing that the long-term coronavirus will cause the economy to fall to negative 1.1%.
Dr. Amornthep Javala, Executive Vice President, Research Office, CIMB Thai Bank, revealed that from the NESDB reported that the Thai economy in the second quarter grew 7.5 percent from the same period last year or 0.4% from the previous quarter after. adjust season and expects full-year growth of 0.7-1.3%, or an average of 1.0%. The CIMB Thai Banking Research Office has revised down its forecast given in July at 1.3% to 0.4% in 2021 and from 4.2. % to 3.2% for 2022, but if the protracted epidemic situation affects the service sector in the country And affecting the manufacturing sector that may be reduced from the problem of infected workers causing exports to decline from the expected. The Thai economy is likely to become negative -1.1% this year and may not expand at all next year.
If analyzing the second half of the economy The Thai economy is at risk of slower than previously expected. from a severe outbreak high levels of daily infections This should result in the government to maintain strict measures to limit economic activities for a long period of time throughout the third quarter. Despite being able to open some more activities during the fourth quarter, the service sector, especially the domestic tourism sector, has not recovered. because the confidence of tourists is still low While the vaccine distribution is not yet complete. Mutated virus results in reduced vaccine efficacy. People still worry about going to the community and avoiding travel. Private consumption this year is likely to be negative compared to the previous year. When there were some supporting factors for consumption, the agricultural income increased from and purchasing power of middle- and upper-income people In particular, workers in the manufacturing sector for exports and salaried workers outside the tourism sector remained stable.
Exports are the hope of the Thai economy. From purchasing power in important markets such as the US, Europe and China, it has expanded well. As a result, the export of automobiles and parts Electronics, chemicals, processed agricultural products and processed food industries continued to expand. But keep an eye out for outbreaks that have infected workers and temporarily halted production. This results in reduced production capacity and can slow exports. However, this issue is likely to be resolved by limiting the number of local labor and regular worker testing to reduce the risk of closure. future factory
In addition, the private sector is ready to invest in machinery. but may slow down investment in construction which may see a slowdown in the new real estate sector especially the condominium market But the private sector should focus more on the construction of low-rise real estate to meet the demand for home workers who need more space.
part of fiscal measures Governments can be a key engine in driving the economy through increased spending and investment. We see that if we have to borrow more 1 trillion baht, we can do it. to support the economy with compensation for the lack of income and incentivizing independent workers to stay at home to reduce the risk of infection if they have to earn money outside the home. But this round of borrowing could boost the economy in the long run in two ways. to build utilities in the area stimulating or reducing people’s expenditure through e-wallet refill measures when the epidemic subsides; and second, through fiscal measures combined with monetary measures, with the treasury allocating money to help bear the risks in the case of credit. which is released to enhance liquidity for businesses and households to become bad debts, otherwise financial measures through lending for business rehabilitation can be slow Due to high credit risk, while the Bank of Thailand was able to cut the policy interest rate by 0.25% to 0.25%, while reducing the FIDF remittance by another 0.23% to reduce the debt burden. and enhance business liquidity or relieve credit limitation
Thai baht There is a possibility of further weakening against the US dollar in the short term to 33.50 baht per US dollar during the third quarter. But when the Fed is clear on signaling a withdrawal of QE while controlling the outbreak in the country while improving vaccine distribution in the fourth quarter. That supports foreign investor confidence and tourism trends in the coming year. The baht is likely to strengthen around 33.00 baht per US dollar and is likely to strengthen against the US dollar next year.
Dr. Amornthep said that summarizes the view of the Thai economy. then as follows
1. Thai GDP in the third and fourth quarters is likely to be negative compared to the same period last year, but not the Technical Recession because Q3 is likely to shrink compared to Q2 only before recovering in Q4.
2. No pent-up demand or the Thai economy lacks momentum due to the sharp acceleration in consumption after the opening of the city as in the third quarter of last year. Because this time, the epidemic still exists. Opening the city was done with caution. And people still lack confidence in spending and traveling.
3. Export growth slower than expected Not because of the outbreak abroad Because foreigners have been vaccinated that protect well But from the outbreak in the country that affects the manufacturing sector especially the labor intensive industries but probably short term
4. The MPC can still cut the policy interest rate. Even though we view the interest rate reduction as just a second best policy, unlike lending to the point But from the problem of slow lending The interest rate cut is likely to enhance specific financial measures.
5. The baht is likely to weaken at its lowest point in the third quarter. before reverting back to strength from better confidence from vaccine distribution
6. In the worst case where the outbreak is severe and affects production for export In addition, trading partners lack confidence in the safety of Thai products. Exports may slow down until next year. Especially if the distribution of vaccines that are effective against the mutant virus is still not very good, Thai GDP this year is likely to contract by 1.1% and may not expand at all next year if foreign tourism is still in the range. low level