Cost of virus crisis

7 07 2020

We at PPT are not economists, but we have seen a flurry of bad economic news, so there’s a need to put it together, especially as the regime continues to cling to the virus crisis to maintain its political control. But the economic crisis is looking like a tsunami. In the Bangkok Post, there’s a Bloomberg article that states:

Gross domestic product is forecast to contract 8.1% this year, according to the Bank of Thailand. That’s worse than official forecasts for any of the main economies across Asia, and would be the country’s biggest GDP decline ever, surpassing even its plunge during the Asian financial crisis two decades ago.

Also in the Bangkok Post, there’s an article on a new political group (Care — Creative, Action, Revival and People Empowerment), said to have been made “by a group of big names in Thai politics and the economic arena, including investment banker and renowned economist Supavud Saicheua…”. As soon as we hear that big shots are involved, we begin to worry. Despite this, read what Supavud says:

What bothers him the most is the fact the economy is faltering badly.

“There is a belief that you could take it slowly, you could open up the economy slowly and things will be OK, as long as you keep the country free of Covid-19. I think there’s a huge trade-off between what you want to achieve on Covid-19 and what the economy needs,” he said.

Roughly, the economy loses about 250 billion baht a month during the lockdown.

He said even though it’s noble to be cautious on Covid-19, the government should be aware of the cost of being overly cautious.

He urged the government and the public to see the importance of opening up the economy or risk it faltering further.

He continues to talk about employment/unemployment:

“Estimates from the private sector had talked about 5 to 7 million jobs being possibly lost if the economic reopening doesn’t proceed as rapidly as it should,” he said.

“Now compare that to 1997. We actually only had 1.4 million jobs lost. So this thing is about three, four times more severe.”

That may be overly optimistic, with the Bangkok Post detailing another private sector view. It is scary, at about 25% of the total workforce:

This image is clipped from the Bangkok Post

What does The Dictator/unelected premier/general Prayuth Chan-ocha have to say? According to Atiya Achakulwisut, his response is: “What would the country be like without me?” Arrogance can’t overcome the basic problem. Atiya goes on:

Although the Prayut government has found success in curbing the coronavirus outbreak, its efforts have taken a heavy toll on the economy.

GDP is shrinking. Shops have been shuttered and people are too afraid of the future to spend. Millions are at risk of becoming jobless and even more are losing hope.

Given the situation, it is just a matter of time before hardship turns to anger and acrimony against the government.

We do know that the super-rich are doing pretty well and we guess that plenty of regime purses are being filled.

Update: Another negative assessment has appeared, this one from the Bank of Ayudhya. The bank’s Somprawin Manprasert said that “GDP may shrink by as much as 10.3 percent this year due to economic woes caused by the coronavirus.” The bank’s report added that “as many as 80 percent of the labor force is affected by the virus, a rise from its earlier forecast of 50 percent.” Somprawin made the forecast even worse by observing: “Delay factors on basic infrastructure investments and drought impacts could reduce the GDP by yet another one per cent and 0.4 per cent respectively…”.




Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: