THAILAND’S gross domestic product could expand by as little as 2.7-3.2 per cent this year instead of the forecast 3-3.5 per cent because of the effect of last week’s “Brexit” vote, mainly on the export and tourism sectors, according to the University of t
“Although the Thai economy still has strength, the gloomy global economic growth will affect Thai trade, and tourism, in some ways,” Thanavath Phonvichai, director of the university’s Economic and Business Forecasting Centre, said yesterday.
The poor picture was seconded by the Thai National Shippers Council, which sees exports suffering a 2-per-cent decline instead of the expected flat growth this year because of British voters’ decision in a referendum to leave the European Union.
For this year, the government’s investment programme will be a key economic engine, with an expected Bt400 billion to be injected into the economy in the second half.
The centre predicts that Thailand will face an economic loss of Bt44.85 billion from the Brexit vote’s impact, which will cause GDP growth to slow by 0.5 percentage point.
Of the Bt44.85 billion, Bt24.85 billion (US$700 million) would come from the drop in exports, Bt10 billion from lower tourism revenue and Bt10 billion from slowing domestic spending as consumers fret over future growth.
Because of the uncertainties arising from the referendum result, 120,000 European travellers, including from the United Kingdom, to Thailand will disappear, while 80,000 travellers from other foreign countries will be missed.
Foreign arrivals will reach only 33.3 million instead of 33.5 million this year. This will cause a loss of Bt10 billion in the tourism industry.
The centre also predicted that exports to the EU including the UK would decline by Bt14.2 billion, and to other countries by Bt10.65 billion.
Thanavath said that with the impact from the reduced trading with the UK, the EU and other markets, Thai exports would face a contraction of 1-2 per cent this year, down from the previous growth projection of zero to 1 per cent.
Lower exports will be the result mainly of the depreciation of the pound and the euro against the baht and the US dollar, while EU and UK buyers will have reduced purchasing power.
The university’s survey of businesses found that they had high anxiety over the long-term impact of the Brexit decision, as it could trigger global economic stagnation.
Most enterprises were concerned about higher debt.
Enterprises in the export sector were afraid that direct investment from the EU and UK to Thailand would soften, while domestic traders were scared that their debt would rise because of lower profit and liquidity.
Enterprises in the tourism industry were fearful that their profit would drop because of the lower number of EU and UK travellers to Thailand.
Nopporn Thepsithar, chairman of the Thai National Shippers Council, said the Brexit vote would weaken the global economy and trading worldwide.
To minimise the damage in the future, Thailand should urgently study the possibility of launching talks with the UK on a bilateral free-trade agreement as well as resume FTA negotiations with the EU itself, he said.