2020 turns out to be a dismal year for the global economy, mainly as a result of the Covid-19 pandemic, and the measures taken to eradicate or control the disease by all governments. Private consumption plummeted as a result of various lockdowns, and also because of fear by people to move around going out shopping. International tourism (extremely important for Thailand) kind of disappeared overnight, and at the end of 2020 has not made any substantial recovery, with flights in between countries severely limited. Thailand for all practical purposes has not opened its borders for tourists as the beginning of 2021 (with few exceptions allowing visitors who comply with very stringent measures). Exports of goods has also decreased for most countries, including Thailand. If possible, governments have attempted to increase government consumption expenditure and investments.
The first graph below shows a lot of similarities and some differences between Thailand and important trading partners. The Chinese economy took a serious dive already in the first quarter, which can be explained by the fact that the pandemic started in that country. Thailand, the Eurozone and the U.S.A. already showed decreases in GDP compared to the last quarter of 2019.
The second quarter showed very steep decreases in GDP in Thailand, U.S.A. and the Eurozone countries, since this was a period when most countries were in a first 'lockdown' significantly limiting freedom of movement for people and goods, and having an impact on industrial production, exports and imports. In Thailand the decrease of GDP is further accentuated by the fact that each month of closure of the country for foreign tourists, means approximately a 1 % decrease in GDP (that is about 10 % for the year). Interestingly, China already started recovering in the second quarter with a growth no less than 11.6 % from the 1st quarter.
In the third and fourth quarter, we see continued more modest growth in China, and the overall growth for 2020 is estimated at around 2.3 %.
The GDP of Thailand, the Eurozone and the U.S.A. grew strongly during the third quarter (compared to the previous quarter) when the economy took a breather after the first wave of Covid-19 infections. For the whole year Thailand managed to have negative growth of no less than -6.1 %. GDP of the U.S.A. contracted by approximately 3.5 %, while GDP of the Eurozone contracted by about 5%.
The second graph (below here) is also interesting, compared growth each quarter of 2020, with the corresponding period of 2019. In China growth compared to 2019 was present since the second Quarter of 2020, be it modest by Chinese standards.
However Thailand, the U.S.A. and the Eurozone were all in the negative throughout the whole of 2020.
Thailand had done actually very well during the first wave of the Covid-19 pandemic, with a very limited number of casualties. More infections (with less casualties, and also more testing) were noted by the end of 2020 and beginning of 2021, due mostly to infections among immigrants in the fish industry, living in close quarters, and among gamblers at illegal gambling dens. However, even towards the end of February 2021, the number of casualties is limited to 83. Most European countries by comparison, suffered many single days when they had more casualties.
However, this second wave in Thailand, reinforces fear in the population, and likely postponed opening the country further to tourism. Vaccinations in Thailand and abroad, certainly will be helpful in this regard, but are of to a somewhat slow start in Thailand.
For 2021, NESDC, considers the following possible areas of growth :
1) Private consumption expenditure is projected to increase.
2) Goverment consumption expenditure is projected to expand by 4.7 %, after showing growth of 3.6 % for 2020.
3) Public investment is estimated to increase by 12.4 % (after growth of 13.7 % in 2020), while private investment may recover from a decline in investment in 2020.
4) Exports are expected to modestly increase during 2021, after a projected decrease in export value by 7.5 % in 2020.
5) Our own suggestion : whether there is any substantial recovery will also depend a lot on the number of tourists allowed into Thailand in 2021. As of now (end 2020) there does not seem to be a great chance that this will happen. The policy seems to be to only eventually allow tourists coming where Covid-19 has disappeared or is almost fully controlled, and even then quarantine periods for arrivals may be considered.
Sources : The data in the graphs are given as reported by the OECD for the Eurozone, the U.S.A. and China. For Thailand, we used data as provided by the NESDC (Office of the National Economic and Social Development Council).