Thailand business groups say economy may shrink if virus impact drags on

March 04, 2020, 02.32 PM | Source: Reuters

ILUSTRASI. Kawasan bisnis di Bangkok.

MACROECONOMICS - BANGKOK. The Thai economy might not grow in the first half of 2020, and could even contract over the full year, if the coronavirus epidemic drags for longer than a few months, a group of leading business associations in Thailand said on Wednesday.

The associations have again cut their 2020 economic growth forecast to 1.5%-2.0%, from a recent downgrade to 2.0%-2.5%, according to a joint committee of the Federation of Thai Industries (FTI), the Thai Bankers' Association, and the Thai Chamber of Commerce and the Board of Trade of Thailand.

The new projection is based on expectations that the virus impact will end by June, after causing there to be no economic growth in the first half, Supant Mongkolsuthree, chairman of the FTI and the joint group committee, told a news conference.

"But if the situation drags on all year, the economy will definitely contract," he said.

"But we don't think it will last that long because the situation should improve as we enter the summer."

Southeast Asia's second-largest economy expanded just 2.4% in 2019, the weakest in five years.

The group, however, expects exports, a key driver of Thai growth, to be flat or possibly fall by as much as 2% this year, Supant said.

The group committee is pushing the Thai government to urgently introduce both fiscal and financial measures to reduce expenses and boost liquidity for businesses, he said.