The steps to be considered Monday include placing more curbs on foreign arrivals, canceling events with big crowds and closing entertainment venues deemed risky for spreading the virus. Confirmed cases jumped by 32 on Sunday to 114, sparking fears of a bigger outbreak and some panic buying of groceries.
The Thai economy was already reeling from a collapse in the critical tourism sector amid lock-downs worldwide to slow the transmission of the disease known as Covid-19. A drought and delayed public spending are additional blows, leaving Thailand with the highest odds of recession among Asian nations — at 30% — after Japan, according to data compiled by Bloomberg.
“We may need a sudden stop of economic activity, like China, as it proved effective in tackling the spread,” said Somprawin Manprasert, chief economist at Bank of Ayudhya Pcl, a Thai unit of Mitsubishi UFJ Financial Group. “With such disruption, the economy will likely contract this year.”
Investors have taken fright, making the benchmark SET equity index emerging Asia’s worst performer with a drop of about 29% so far in 2020. The baht has tumbled almost 6% against the dollar over the same period, the second-largest decline in an Asian basket tracked by Bloomberg.
Prime Minister Prayuth Chan-Ocha’s ruling coalition last week rolled out stimulus steps designed to deliver a near-US$13 billion economic boost, but their effectiveness is in doubt after previous packages fizzled.
The Bank of Thailand’s scope to follow in the footsteps of the U.S. Federal Reserve by slashing borrowing costs to near zero, from the current 1%, may be limited by rules making 0.5% an effective lower bound.
Sunday’s abrupt jump in virus cases raised the specter of widespread community transmission of the kind that sickened thousands of people in nations such as China, South Korea, Iran and Italy.
Prayuth said Sunday that officials are mulling contingency options in case infections climb, such as setting up a hospital specifically for Covid-19 patients. Operators of riskier entertainment venues like pubs and sports stadiums could be ordered to close, he said.
“Today, health is the most important issue,” he told reporters in Bangkok.
Tourism accounts for about a fifth of the economy, but the government estimates arrivals may drop 24% from last year, to 30 million people.
Citigroup has chopped its Thai growth forecast to 0.2% for this year from 2.2%, while Bangkok-based brokerage Phatra Securities Pcl predicts a 0.4% contraction.
“There’s going to be a big trade off,” Bank of Ayudhya’s Somprawin said. “Economic losses, for the control of the epidemic.”