InfoQuest, (May 29, 2020) -- In April 2020, the temporary interruption of economic activities in many sectors incurred by the strict COVID-19 containment measures at home and abroad deteriorated the economic downturn in Thailand; the tourism dramatically shrunk due to Thailand's entry restriction measures; and the export of commodities, excluding gold, declined sharply because of the demand reduction of trading partners, said Mr. Don Nakornthab, senior director of the Economic and Policy Department at the Bank of Thailand (BOT).
The low purchasing power and the epidemic containment measures gave rise to the shrinking of private consumption index. The demand reduction and economic uncertainty brought about a sustained sharp decline in private investment and industrial production index. Government expenditures including regular spending and investment expenditures were ever-increasing. This month, Thai government successively extended grants to those affected by the COVID-19 outbreak, which will be in favor of the economy in the next stage.
With respect to economic stability, the inflation rate of energy fell owing to the global crude oil price as well as the government's measure of lowering power rate to ease the burden of its people, further triggering the negative growth of the overall inflation rate. The labor market was even more vulnerable. A current account deficit occurred. The capital account saw a balance thanks to the net surplus of assets.
The number of foreign tourists showed a 100 percent decrease compared to the same period last year, mainly because Thailand implemented entry measures to control domestic COVID-19 outbreak which caused no foreign tourist in Thailand this month. The loss of foreign tourists had a severe impact on the fields related to tourism, especially hotel, restaurant and passenger transport.
The total commodity export value dropped 3.3 percent compared to the corresponding period last year. Excluding gold that set a new high in export this month, the fall in the export value was up to 15.9 percent. Besides, the export saw heavy falls in automobiles and parts as well as commodities with the value changed along with the price of crude oil. The export of electric appliances, machinery and equipment experienced a significant contraction due to the recession in demand of trading partners and the decline in global crude oil price. Some commodities still enjoyed a rising tendency, such as electronics, processed agricultural products, and agricultural products which benefit from the COVID-19 outbreak.
The private consumption index dropped sharply compared with the corresponding figure last year. This month, Thai government gave out grants to those affected by the pandemic, but the decrease was seen in all kinds of expenditures, mainly because of weak purchasing power of families, reduction in employment, income and confidence, and delay of Songkran as well as the lockdown measures due to the increasingly severe pandemic and its spread over Thailand. The industrial production shrunk, in line with the weak domestic and overseas situations.
The private investment index showed a sustained sharp contraction compared to the same period last year, greatly due to the remarkable reduction of investment in machinery and equipment and the dramatic fall in the performance and business confidence caused by the weak domestic and overseas demands. In addition, the excess capacity of the business sector resulted in the investment delay.
The total value of commodity imports decreased by 17.0 percent compared with the corresponding figure last year. If the gold is excluded, the import value fell 13.8 percent. All important commodities including raw materials, intermediate products, capital goods and consumer goods saw a contraction, consistent with the tendency of reduced economic activities.
Except for transfer account, the government expenditures saw a sustained increase compared to the same period last year, both in terms of the regular spending and investment expenditures. The rise in regular spending was caused by the spending in purchasing commodities and services, especially those related to the epidemic prevention and control. The investment expenditures increased because of the funds allocated by the central government and state-owned enterprises.
The overall economy maintained stable, but it was more fragile. The inflation rate of energy fell owing to the global crude oil price as well as the government's measure of lowering power rate to ease the burden of its people, further triggering the negative growth of the overall inflation rate. The core inflation rate saw a positive growth, but continued to fall, in line with the trend of domestic demands. The labor market was even more vulnerable, which was reflected by the great increase in the number of people who applied for the unemployment insurance of social insurance. The significant decline in the dividend payment of the business sector and the tourism revenue led to a current account deficit. The capital account saw a balance thanks to the net surplus of assets.
Source: InfoQuest, by Thapa/ Kasamarporn/ Rachada, translated by Xinhua Silk Road
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