Pedestrians walk near a beggar along a sidewalk in Bangkok on May 23, 2020. Photo: AFP/ Romeo Gacad

BANGKOK – Thailand’s relative success in containing Covid-19 is being overshadowed as the pandemic’s impact on the kingdom’s devastated economy becomes more glaringly apparent.

Since the pandemic hit in March, 70% of Thailand’s national workforce has seen their average monthly income decline by 47%, 11% of micro and small businesses are verging on permanent closure and 75% of small tourism-related businesses have had their revenues decline by at least three-quarters.

These are some of the Asia Foundation’s revealing preliminary findings from national surveys the think tank conducted with local partners in May and June to assess Covid 19’s impact on what is expected to be one of Asia’s hardest-hit economies.

While praising Prime Minister Prayut Chan-ocha’s government for tackling the virus – with only 3,351 reported cases and 58 deaths with no local transmissions since May – the report notes “the extent of the economic impact is only now beginning to come to light.”

The government’s National Economic Social Development Council (NESDC) will announce next week its second quarter gross domestic product (GDP) estimate, a year-on-year contraction analysts say is likely to exceed 12%.

Thailand’s GDP is forecast to contract 8-10% this year, before recovering to 4-5% growth in 2021. Real GDP is not expected to reach its pre-Covid level until 2023, according to the Thailand Development Research Institute (TDRI), a Bangkok-based independent think tank. 

A mask-wearing vendor waits for customers at a Bangkok market. Image: AFP

But these raw GDP figures fail to convey the exceptional damage Covid-19 has inflicted on the kingdom’s most vulnerable citizens and their livelihoods.

The World Bank estimates that the number of people made “economically insecure” by the Covid-19 crisis increased to 9.7 million in the second quarter, compared with 4.7 million in the first quarter. Thailand’s population is currently estimated at around 69 million.

The situation could get worse before it gets better despite a phased easing of previous lockdown measures. Prospects for a quick rebound of the crucial tourism sector, which accounts for around 18% of GDP and an estimated 6 million jobs including ancillary industries, is fading fast. 

After a border-closing lockdown first imposed in March, the number of international tourists visiting the kingdom dropped from 3-4 million per month to near zero in April.

Authorities have indicated that Thailand could remain closed to international tourism until next year, with earlier plans to create “tourism bubbles” with countries that have likewise successfully controlled the virus.

That means hotels, travel agencies and related tour services will miss out on the country’s traditional revenue-generating November-January peak season. The government’s guarded approach is raising grumbles among tourism operators.

“Thailand is now being run by doctors who are overly cautious,” said Luzi Matzig, chairman of Asian Trails Group and five-decade veteran in Thailand’s tourism business. “It’s as if the Ministry of Transport were to say now we have to lower the speed on highways to zero so we can have zero accidents.” 

Thailand’s Prime Minister Prayut Chan-ocha speaking after a cabinet meeting at the Government House in Bangkok on August 13, 2020. Photo: AFP/Government Handout

Currently, all foreign arrivals in Thailand, including diplomats and businessmen keen to invest in the country, must endure 14 days of state-run quarantine in selected Thai hotels.

Thai health authorities have been spooked by Vietnam, a country that had contained the virus in early 2020 but then suffered a resurgence in cases after it opened up domestic travel through an outbreak erupting in the seaside town of Danang that quickly spread nationwide.

Since July 1, Thailand has subsidized domestic tourism spending – which accounts for 6% out of the 18% tourism contributes to GDP – without suffering a Covid resurgence.          

But Thais are still on edge. The last reported foreign Covid case was an Egyptian VIP military officer who traveled on a diplomatic visa and disobeyed a government order to stay in his hotel by sneaking out to visit a shopping mall.

There were no local infections in Rayong province where the quarantine violation occurred reported but the solitary case of an infected foreigner irked many Thais and sparked an avalanche of criticism on social media.

“I think when people see that the country is free from Covid for three months, they want to stay clean, they don’t want anything to contaminate them,” said Supawan Tanomkietipume, president of the Thai Hotels Association (THA), a key lobbyists for reopening to foreign tourism.

“I think they don’t want to take the risk at the moment,” Supawan said of the government. “But I think it is impossible for the economy – more and more people are affected and might not be able to survive.”

Traditional Thai dancers wearing protective face shields perform at the Erawan Shrine, which was reopened after the Thai government relaxed measures to combat the spread of the coronavirus in Bangkok, May 4, 2020. Photo: AFP/Mladen Antonov

Thailand’s economy and finance system is highly exposed to empty hotels, though by how much is unclear. THA says it does not know the actual number of hotels operating in the country, a statistical black hole it has asked the government to help investigate.

THA estimates that there are as many as 66,000 hotels nationwide, of which only 17,000 are properly registered. The remaining 49,000, including guest houses and Air B&Bs, are unregistered and therefore only semi-legal.

The hotel sector employs about 1.6 million people, of whom 55% are employed by bigger registered hotels.

Supawan estimates that 50% of registered hotels are shuttered due to a lack of customers, which means 50% have laid off or furloughed staff. She has no estimates for unregistered hotels, where vacancies are likely even higher.

Nor does she know how many unregistered hotels have gone bankrupt due to a lack of cash flows. Most of the bigger hotels, she says, can reschedule loans with banks because they can use their properties as collateral, but that’s not the case for smaller unregistered ones.

The government has swiftly put in place comprehensive relief measures for the unemployed, which NESDC estimates could reach 8 million out of a labor force of 38.2 million.

It has allocated 1.9 trillion baht ($61.2 billion) in relief measures, including a 600 billion baht scheme in cash handouts to those hardest hit by the lockdowns, but implementation and disbursals of some schemes has reportedly been slow.

For instance, only 100 billion baht ($3.2 billion) in soft loans (2% interest) has been distributed to distressed companies. Some 12.6 million accounts with loans worth 6.7 trillion baht, or 36% of the financial system, applied for the scheme, according to Supavud Saicheua of Pharta Thanakit Securities and co-founder of the CARE political movement.

Closed businesses along Sukhumvit Road in Bangkok’s main tourist and business distirct during the Covid-19 pandemic. Image: Facebook

“We are worried about SMEs,” Supavud told a recent forum. “There were 1.1 million SMEs who volunteered for the program with a loan value of 2.21 trillion baht, which amounts to 47% of the SME loans in the system. The banks have only lent about 100 billion baht. Does 100 billion baht fall short of 2.21 trillion baht?” he asked.  

A lack of good data is hurting the government’s Covid-19 rescue and recovery efforts. An estimated 7-8 million Thais employed in Bangkok and other cities returned to their provincial homes during the lockdown. Many are likely to remain there as economic uncertainty remain.

Many of them are among the 15 million who received 5,000 baht relief checks for three months, although 28 million people applied for the scheme. TDRI has suggested data compiled by the state-run Krung Thai Bank on the most needy could help the government to better formulate effective projects in the countryside.

“The data is sitting there – on what jobs have been lost, where they have moved to, what kind of skills they have,” said Kirida Bhaopichitr, research director at TDRI. “There are opportunities but we have to act on it now and not waste a good crisis,” Kirida said.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now.