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Can Thailand turn COVID-19 crisis into opportunity?
Thailand has been cited as a success story in containing the coronavirus outbreak, having gone more than 50 days without any local transmission, but the government now faces growing criticism along with one of the worst economic outlook in Asia.
Thailand’s economy is expected to shrink 8.1% this year, on track to become Southeast Asia’s worst performer according to the Bank of Thailand.
Analysts surveyed by Bloomberg predict Thailand’s economy will contract more than others in Southeast Asia, at 6%, and with a weaker rebound in 2021 of 4%.
An estimated 8.3 million workers will lose employment or income by the COVID-19 crisis, which has put many jobs, in particular those related to tourism and services, at risk.
9.7 million economically insecure people
According to the World Bank’s latest Thailand Economic Monitor, the number of economically insecure, or those living below USD 5.5 per day (in purchasing power terms), is projected to double from 4.7 million people in the first quarter to 9.7 million people in the second quarter of 2020.
The Thai cabinet has so far injected about $60 billion of stimulus into the economy to offset falling exports and tourist arrivals, but Thailand’s economy could take as long as two years to return to pre-pandemic levels, according to Bank of Thailand and World Bank forecasts.
“Thailand has large exposure as a tourism hub, close to 15% of GDP, and it also has a large exposure to the export-oriented sector,” said Kiatipong Ariyapruchya, senior economist for Thailand at the World Bank.
With no foreign tourist arrivals or receipts for a third straight month in June as the pandemic forced border closures, annual tourist arrivals are forecast to drop to 8 million, just one-fifth of last year’s total.
Diversifying away from exports and tourism
Thailand’s post-covid economy should be diversifying away from exports and tourism, which together generate 70% of gross domestic product, to avoid being over exposed to external factors.
But this would require much more than just a fiscal stimulus package or bigger tax incentives. Thailand must invest considerably more into education and training, as Asian growth becomes more about ideas and productivity than labour-cost arbitrage.
Thailand’s economy is out of sync because of the changing nature of globalisation. The benefits of labour-cost arbitrage are declining while the importance of productivity and efficiency is rising.
PaviNda Pananond – Associate professor of International Business,
Thammasat Business School, Thammasat University
Since 2015, Thailand has worked on a long-term economic renovation called Thailand 4.0, aiming to drive the country toward a value-based economy focused on a creative, and innovation-driven economy.
But so far little has been done to bridge Thailand’s digital divide.
According to the International Telecommunication Union (ITU) and the TDRI, a greater problem faced by households in Thailand than a poor Internet accessibility is having no computers to use at home.
Compared to countries around the world, only 21% of Thai households have computers, which is lower than the global average of 49% and the developing countries’ average of 38%.
Meanwhile, the proportion of Thai households with home Internet access is 68%, which is higher than the global average of 55 percent and the developing countries’ average of 44% in 2018.
The digital divide in Thailand has been a problem that detrimentally affected poor households for a long time. The outbreak of the Covid-19 highlights the importance of reducing this inequality.
A high level of inequality
Thailand’s extreme concentration of wealth among elites is also curtailing Thailand’s ability to recover from the Covid-19 crisis, as more than half of workers in Thailand are informal, meaning they are not covered by a social security scheme and are particularly vulnerable.
Thailand also has a high level of income inequality, according to the Office of the National Economic and Social Development Council which reveals that the richest 10% of the country’s population have incomes that are 19 times higher than the poorest 10%, adding the former own over 61.5% of the country’s land while the latter barely own 0.07%.
COVID-19’s economic impacts create a unique opportunity to rethink the traditional employment-based foundations and lack of social protection in Thailand.
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