Thailand has emerged as a success story in containing the COVID-19 outbreak, but the country still faces tremendous pressure on several fronts. A major effort will be required to pull Southeast Asia’s second largest economy back from the abyss. This paper will examine in general terms what Thailand has done so far to manage the public health crisis, the monetary and fiscal policies necessary to mitigate economic impact, the opportunities and threats presented by the pandemic, and what the Thai government should consider doing in order to revive the deeply-hurt economy.
The Kingdom was already struggling with a series of external and internal challenges even before the emergence of the COVID-19 pandemic. These ranged from the global economic slowdown, the U.S.- China trade war, sluggish domestic demand, an excessively strong baht, drought, and delayed budget approval.
Exports have long been the key driver of the Thai economy, and a 3.2% exports contraction last year dragged Thai GDP growth in 2019 to 2.4% from 4.2% a year earlier.1 Meanwhile, most other growth elements were also crippled. Severe drought pressured farm income and consumption while economic uncertainties put off private investment. Government budget disbursements were also adversely affected by delayed parliamentary approval of FY19-20 budget bill (the Thai fiscal year runs from Oct 1 to Sep 30).
Over the years, the tourism sector has been another main source of income for the “Land of Smiles,” accounting for approximately 15% of GDP. According to the Ministry of Tourism and Sport, Thailand welcomed 39.8 million foreign visitors and reaped THB1.93 trillion (US$62.35 billion) in tourism receipts in 2019, up from 38.2 million tourists and THB1.88 trillion (US$60.52 billion) in the previous year.