The coronavirus pandemic has undoubtedly changed the world economy and affected businesses around the world. Thailand’s economy is expected to be impacted by a loss of THB 1 trillion during 2020.
As per a recent Krungsri market research report, Thailand would witness a 65% drop in tourist arrivals due to the 2-month lockdown and subsequent controlled measures on international travels. This in turn would reduce 2020 GDP growth by 5.4 ppt (approximately THB 1 trillion) from the pre-pandemic level.
Coronavirus pandemic creates twin supply-demand shock
A global recession is now imminent. Unlike the last two global recessions in 2001 and 2008, the COVID – 19 crisis has triggered two economic shocks:
(i) supply shock: output cuts, factory closures, disruptions to supply chains, trade, and transportation, higher prices for material supplies, as well as tighter credit conditions;
(ii) demand shock: people and governments around the world take steps to slow the spread of the coronavirus (i.e. lockdowns, quarantines, social distancing, etc.).
Some businesses might be forced to shut down (either temporarily or permanently) and also several companies resorting to layoffs,
The cascading impact of the massive economic fallout can be split into four groups
The first two groups would be heavily affected sectors that would see output drop by more than 5%. Within these groups, industries affected by income shock (or demand shock) are likely to take longer to recover than those largely affected by supply disruption. The other two groups would see the moderate and mild impact:
(i) Heaviest impact – Airlines, Hotels, Restaurants, Entertainment & Recreation, Business Services (e.g. Retail Space), Marine Transportation, Petroleum Refineries, Retail Trade, Banking Services, Real Estate, Wholesale Trade, Automobile.
(ii) Heavy impact but with quicker recovery period – Oil & Gas, Beverages, Electronics, Non-Metal Ore, Metal Ore, Basic Metal.
(iii) Moderate impact – Construction, Tobacco, Textile Products.
(iv) Mild impact – Hospitals, Agriculture.
The silver lining
The coronavirus crisis has boosted the demand for agricultural products as these provide food security. There have been rising overseas orders, especially for rice, dried and canned food products, concentrated latex (input for medical gloves), and cassava chips (input for alcohol-based sanitizer). Health concerns have put people on high alert, which could encourage visits from domestic patients although they have only mild symptoms. This would partly compensate for fewer non-resident patients, and help private hospitals to maintain revenues.
Thailand has experienced a lot of complications from the time of reporting its first confirmed case of COVID-19. However, there are still plenty of business opportunities which has opened up in Thailand. As countless individuals overall are compelled to remain in their homes and not travel abroad, the organizations that are helping them to adjust could prompt long haul changes in the economy.
The coronavirus pandemic has pushed the world to the edge of total collapse. As organizations over the world scramble to evaluate the harm and how best to reduce the effect of COVID-19 on their activities, for the startup world, the suggestions are significantly extreme.
COVID-19 will most directly shape economic losses via financial markets, supply chains, household consumption, etc. Having a proper economic understanding is essential for starting a business in Thailand and benefit from international trade.
Startup in Thailand has launched a special low cost, flexible scheme called Build Entrepreneurs for individual entrepreneurs to combat the COVID-19 situation in Thailand and launch their business in a cost-effective way.
Startup in Thailand is the only company in Thailand to provide a single-window solution for all business startup and expansion requirements: Startup Consulting | Thailand Market Entry | Legal assistance | Serviced Office | Factory Setup | Representation | Recruitment Services | Accounting | Operations | Buying & Sourcing | Distribution | Sales & Marketing | Regional Business Development | Management
Interesting Reads :
- Top 12 Profitable Business in Thailand in 2020
- How can a Startup Consultant Help you to Run your Business
- Franchise Opportunities in Thailand
- Business in Thailand – How Different it is from Rest of the World
- A Challenging Baht for the Thai Economy in 2020
Latest posts by Andy Aditya (see all)
- 2022 – Strategies for the hospitality industry to bounce back - May 14, 2022
- Overview of Thailand’s Startup Ecosystem - May 7, 2022
- Critical Success Factors for Startups in Thailand - April 29, 2022