Thai manufacturing exports began to show some sign of improvement in December even with manufacturing still falling year on year. The budget vote debacle and the short-term collapse on tourism from China have already seen economic experts predicting a disastrous opening quarter for the economy in 2020. The weakening baht is a silver lining, however, providing the economic effects of the virus outbreak can be contained in China and worldwide or that it does not break out in Thailand.
Since the coronavirus outbreak came to light at the end of last year, the Thai baht has reversed its course during 2019 and lost over 4.8% against the dollar during the month. Unfortunately, the viral epidemic, that is still spiralling out of control, has devastated the prospects for Thailand’s tourism industry this year, at least in the first quarter. It will also have effects on the overall economy as economic supply chains in China are hit.
Thailand’s tourism industry in January has been severely impacted by the collapse in Chinese visitors following a ban by Chinese authorities on January 24th. Latest figures show that the number of arrivals has decreased by up to 70% as the impact of the coronavirus epidemic continues to spread and rise.
The disaster has also seen international airlines begin to cut all flights to China in the last 24 hours and is also beginning to impact inbound tourism to Asia from other parts of the world as it dominates the world’s news media and fears of contagion spread.
Growth outlook for Thailand cut back to 1.9%
One expert, Thanawat Phonvichai, of the University of the Thai Chamber of Commerce, has so far estimated that the virus epidemic, if it continues into March, will see up to 0.7% of Thailand’s potential GDP growth wiped out this year. The university’s economic experts have reduced the projected growth figure for the Thai economy to 1.9% as of now for 2020.
Thai currency has weakened sharply in line with the outbreak especially in the last week
One of the most noticeable economic aspects of the current crisis and overlooked in the coverage of the coronavirus outbreak, is the sudden weakening of the Thai baht.
The currency has lost over 4.8% of its value against the US dollar since hitting a low in December 31st December last. At that point, the Thai baht reached ฿29.69 to the dollar and today it was being traded at ฿31.12.
The decline of the baht has occurred at the same time and corresponded to the Chinese virus outbreak which has, from the start, threatened Thailand’s tourism prospects.
The weakness in the baht has, however, been severely pronounced since Chinese tourist number plummeted in the last week.
Virus is bigger than the 2003 SARS outbreak with concern about the spread of infection
There are also concerns that the coronavirus outbreak has wider implications not just or the Thai and Asian economies but the global world outlook.
This outbreak has already been confirmed as being a bigger threat than the SARS outbreak of 2003 with over 7,700 cases now being reported both within and without China and deaths of 132. There is also a growing number of infections now being reported from outside China.
SARS in total, over a six month period, only infected just over 5,300 people. There are also growing numbers of suspected cases in China with confirmed figures today of over 70,000.
Carriers can be contagious without symptoms
However, the biggest concern that is emerging is the infectiousness of this virus. Two of the people detected in Japan with the virus have shown no symptoms of it. Some of those infected in Japan as in Germany had never been to China or Wuhan.
This is provoking heightened concern among experts and may explain the accelerating ability of this virus to spread within China evading stringent controls.
Chinese economy increasingly impacted
Economically in China, this has already led to the closure of factory lines and production facilities particularly those associated with western countries including Tesla in Shanghai.
It is also seen McDonalds and other western businesses in China, severely restrict and curtail their operations in the communist country.
Budget vote crisis delaying public investments
For Thailand, it is another severe blow to the economy coming with the crisis and legal challenge over the government’s much needed 2020 budget which has been taken up today by the Constitutional Court.
This delay, it is feared, could stymie capital investment in key public projects necessary to keep the economy moving forward in 2020.
Thailand’s manufacturing exports showed marginal signs of improvement in December
However, the weakness of the baht may help amid signs that Thailand’s manufacturing exports had begun to pick up in December along with higher imports in areas such as air-conditioning and computer drives.
Agriculture exports remained challenged with drought severely affecting the country and low priced competition in regional markets.
It should also be noted that while December showed some signs of optimism for manufacturing exports with an extremely marginal improvement, the manufacturing production index still went backwards by 3.23%.
Government reviewing visa provisions for Chinese tourists but minister opposes such a move
Despite a warning from the Department for Disease Control on Wednesday that an outbreak in key tourist areas in Thailand was a ‘highly possible’ occurrence, the government is still reticent about annulling visas on arrival even for Chinese provinces hardest hit by the current epidemic.
Malaysia has had no such qualms and has already withdrawn its visa on arrival facilities for all Chinese tourists as well as banning visas altogether for the hardest hit Chinese province of Hubei.
Today, the Tourism and Sports Minister, Phiphat Ratchakitprakarn, ruled out such a move for now. ‘This is a delicate issue for Thailand, which requires input from every agency. We should not act like we’re eager to cut off our close friends just because they are falling ill,’ he said.
Clampdown on coronavirus fake news
However, it is reported that the visa on arrival for Chinese tourists is under review amid plaintive calls from the public in Thailand to act.
Public engagement and angst over the issue in the kingdom are already extremely high. Part of the reason for this is Thailand’s massive internet and social media activity rate.
On Thursday, Thai police and the Ministry of Digital Technology announced the arrest of several Thai citizens for posting fake news in relation to the outbreak which has contributed to the growing sense of alarm felt by Thai people online.
Rise in anti-Chinese sentiment countered by genuine solidarity and support shown to Chinese visitors
There has also been a rise in anti-Chinese sentiment as is also being reported in other countries especially in Asia with corresponding efforts by Thai authorities and other sections of the population to emphasis solidarity with and support for the Chinese people, particularly those still visiting and in some cases stranded in Thailand.
China once more at the heart of Thailand’s problems in 2020 as it is forced into the defensive mode
The coronavirus has only added to the defensive posture and the anxiety of Thai officials in dealing with the economy in 2020.
However, it is difficult not to note that Thailand’s misfortunes since the beginning of last year, all seem linked to its larger neighbour to the north such is its growing and unpredictable influence on the kingdom.