Like many countries around the world, Thailand has been making efforts to revive its coronavirus-hit economy. But the Southeast Asian nation is facing a double whammy with anti-government protest movements taking a toll and posing a prolonged risk.
The protests that began in July against the government and even the monarchy show no sign of ending with a major rally held on Nov 25 in Bangkok. The day before, Thai police reportedly summoned several leaders of anti-government protests to face charges of royal insult.
Suan Teck Kin, head of research at Singapore’s United Overseas Bank, said it is currently a very challenging time for Thailand.
“With economic activities already impacted by the pandemic, the domestic protests will weigh further on sentiment and businesses,” Suan said.
With economic activities already impacted by the pandemic, the domestic protests will weigh further on sentiment and businesses.
Suan Teck Kin, Head of research at Singapore’s United Overseas Bank
Though Thailand has largely put COVID-19 under control, Suan said the country is still expected to be the second worst pandemic-hit economy among the ten members of the Association of Southeast Asian Nations.
Based on the forecast by UOB, Thailand’s economy is expected to contract 6.5 percent this year, only after the Philippines’ contraction of 9.3 percent.
In the second quarter, Thailand’s GDP shrank 12.2 percent, the biggest decline in 22 years since the Asian financial crisis in 1998, according to Xinhua, citing the National Economic and Social Development Council.
In a Worldcom Confidence Index released by the Worldcom Public Relations Group in November, Thailand ranked 31st out of 36 countries surveyed in terms of executives’ confidence level. The country’s index score was 16.45, compared with the global average of 18.59.
Thailand’s manufacturing sector is still contracting. Data from the industry ministry showed that the manufacturing production index dropped 2.75 percent in September from a year ago, according to Xinhua News Agency.
In contrast, the manufacturing sector of Vietnam, another major economy in Southeast Asia that in general, has managed the contagion well, returned to growth in the same month. The Purchasing Managers’ Index rose back to 52.2, up from 45.7 in August.
Alicia Garcia-Herrero, chief economist for Asia Pacific at French investment bank Natixis, forecasts Thailand’s economy to shrink 7.5 percent this year and to show a strong rebound of 5 percent next year.
Noting that COVID-19 will remain a key factor that affect Thailand’s economy, Garcia-Herrero, also a senior research fellow at European think tank Bruegel, said “higher political risk is weighing negatively on investment” both in terms of domestics and foreign direct investment.
“I don’t think protests are as important as travel bans and quarantine rules, at least not so far, so I am more optimistic about 2021,” said Garcia-Herrero.
Suan of UOB said “the large gatherings in close proximity could also spread the virus, which in turn could cause further business disruption if infections cases rise and the government has to institute lockdowns to slow the spread”.
If Thailand wants to boost its economy by attracting foreign tourists, Suan said that controlling the virus is the only way to give people confidence.
The main risk from the protests is that it could turn tourists away, even if borders are open, said Suan, noting that tourism is an important component of Thailand’s economy.
Tourist receipts account for around 13 percent of Thailand’s GDP, and combined tourism and travel accounted for around 22 percent of GDP last year, according to Michael Langham, senior Asia country risk analyst for Fitch Solutions.
"Of this, Chinese tourists are by far the most significant for Thailand, accounting for 27.6 percent of arrivals and 28.1 percent of tourist receipts," said Langham.
Thailand is working to gradually open its doors to international tourists. In late October, it welcomed the first batch of Chinese tourists under a special tourist visa program. It was the country’s first group of foreign arrivals in seven months. All members of the group tested negative for COVID-19 after their 14-day quarantine, according to Xinhua.
Thailand’s Ministry of Tourism and Sports on Nov 6 said that it is eyeing a travel bubble with China.
Wantanee Suntikul, assistant professor at the School of Hotel and Tourism Management at the Hong Kong Polytechnic University, said the impact of the protests on the tourism sector is expected to be limited, but it might still affect tourists’ travelling plans.
For foreign tourists, including those from China, “instead of going to Bangkok, they might like to focus on the routes to the southern or northern part of Thailand, where there are not many big groups of protests”, said Suntikul.
Noting the protests are largely peaceful, Suntikul said the travel bubble plan is not likely to be affected unless there is a sudden change in the COVID-19 situation or if there is a coup d'etat similar to what happened in Thailand before when the military took control.
As for domestic tourism, which the Thai government is also working to promote, Suntikul said people are still travelling, but the general concern is for their own financial status, rather than the COVID-19 situation or the protests.
As of Nov 25, the total number of COVID-19 cases in Thailand had reached 3,926. Most of its recent cases were imported.
Somkiat Tangkitvanich, president of the Thailand Development Research Institute, warned on his Facebook page that “Thailand is at a critical turning point”.
There are no other options to resolve the conflicts, except by discussion and the use of democratic means, said Somkiat, calling for dialogue to resolve the crisis.
Only through rationality, consciousness and compassion, or at least tolerance to different opinions and maturity, can Thailand and its people resolve the issue in a proper manner and avoid losses, said Somkiat.
Suan said the Thai government needs to deal with the demands of the protesters, not just on a political level but also economically.
A May estimate by NESDC said that about 14.4 million workers in Thailand may face unemployment in the second and third quarters of this year, with 2.5 million in the tourism sector at risk of job loss.
Suan said an underlying issue he sees from the protests is the income gap that has been exacerbated by COVID-19, as many young people could be working in tourism-related industries and may have been greatly affected during the pandemic.
“Maybe the loss in income and the loss in employment could be a driving force of these protests,” he said.
HONG KONG NEWS