Panel warns growth could sink towards zero

A panel of private sector leaders has warned that economic growth could sink towards zero in the first half and even shrink for the full year if the coronavirus epidemic is prolonged until late 2020.

The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) trimmed its forecast for full-year GDP growth again yesterday, to a range of 1.5-2%, on the assumption that the virus crisis will fade by mid-year, said Supant Mongkolsuthree, chairman of the Federation of Thai Industries.

The JSCCIB in January predicted that the economy would expand in a range of 2.5-3%, then last month it cut the projection to 2-2.5%. The panel’s latest prediction is in line with the National Economic and Social Development Council’s estimate of 1.5-2.5%.

The panel’s export growth view remains unchanged between flat and a 2% drop, while inflation is seen at 0.8-1.5%.

Mr Supant said the wider spread of the coronavirus is the latest risk putting pressure on the economy.

“It delivers a blow to the country’s tourism, export and logistics industries, which are key engines driving growth,” he said. “State budget is the only engine that remains functional, so we are pinning hopes on the efficiency of budget spending to help the economy gain some momentum.”

Mr Supant said only employees in the tourism sector are being offered unpaid leave, while working conditions for those in other sectors remain unchanged.

“We hope the coming hot season from March to May will cause the outbreak to recede and business can return to normal,” he said.

He urged the government to launch measures such as soft loans, debt restructuring and exploration of new export markets to replace China.

All of the proposals are to be discussed by the economic cabinet and the JSCCIB tomorrow.

The joint committee estimates that 12 industrial sectors are suffering the most out of 45 in total.

The 12 are electronics, auto parts, cosmetics, chemicals, refined oil, wood processing, wood panels, handicrafts, jewellery, biotechnology, food and herbs.

These sectors ship their products to China, and some also buy raw materials from the mainland, where the outbreak has clamped down on business activity.

Nine sectors have received moderate negative impact because they can shift to using raw materials from countries other than China.

The nine are automobiles, air conditioners, textiles, ceramics, glass, medicines, steel, leather and marine services.