RidetheMacro| USDTHB Market Commentary 2020.09.21As the drivers of exports and tourism continue to be missing in action, the negative GDP growth trend is here to stay for the rest of the year, and perhaps beyond. Rising political uncertainty is another reason why we expect the Thai baht to remain one of Asia's weakest currencies over the remainder of the year.
🦠 Thailand has been one of Asia’s Covid-19 success stories. It was the first Asian country outside China to report infections but also the first one to have the outbreak under control.
⚡ However, the economy hasn't been spared from the fallout of this global Covid-19 pandemic. A 12% GDP plunge in 2Q was the steepest since the Asian crisis in 1998. Without vigorous exports and a recovery in tourism, a couple more quarters of negative growth remains our baseline.
📌 High unemployment and weak demand have pushed inflation into negative territory. Inflation should continue to be a non-issue for the economy and for policy throughout 2021-2021.
📍 Covid-19 stimulus worth a total of 14.5% of GDP places Thailand in the ranks of the big spenders throughout in this cOVID-19 crisis. A little over half of this comprises a genuine boost.📉
🔑 The economy is sinking into a recession. The recovery is going to be even slower than the most recent crisis.
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