Thailand can expect another wave of business closures in the second half of 2020 as the economic consequences of the pandemic, lockdown and withdrawal of tourists reverberate nationwide, says the Employers’ Confederation of Thai Trade and Industry (EconThai).
The group bases its prediction on weak individual purchasing power, a global economic slowdown dealing a blow to the export sector and the dim prospects for the economy as outlined by the Bank of Thailand.
EconThai vice-chairman Tanit Sorat said, “The number of firms succumbing to financial ills is inconclusive, but the government’s order to suspend business activities only froze them for a while, but these factors may force certain businesses to shut down permanently because they cannot afford operating costs”.
Mr Tanit believes that “many businesses” will barely survive and that small and medium-sized enterprise especially may struggle to avoid laying off workers.
Although the government has begun easing the lockdown, with a plan to allow further businesses, including internet cafes and bars, to reopen, the domestic economy may not recover to a satisfactory level.
Mr Tanit said, “EconThai is worried that many businesses will reopen only to face the low purchasing power of the people”.
Those overseas are likely in a similar situation. Thailand’s economic growth or contraction will depend on what happens on a global scale, according to EconThai.
The Commerce Ministry on Wednesday acknowledged for the first time that the country’s exports could shrink by more than 5% for the full year after a 22.5% year-on-year plunge in May.
Mr Tanit urged the government to closely monitor the economy in the post-pandemic period. He cited a forecast by the Bank of Thailand saying the domestic economy would contract by 8.1% this year, a significant worsening from the 5.3% seen by the Monetary Policy Committee in March 2020.