Country Focus
2020: still a banner year for Thailand’s key industries Thailand, Southeast Asia's second-largest economy and the world’s 19th largest manufacturer, is on track to achieving its high income status ambition by 2037 by leveraging competence in the automotive and medical devices industries, says Angelica Buan in this report.
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n previous years, Thailand has tussled with weak exports resulting from the US-China trade war, further aggravated by a strong currency during the period and long-running political tensions. Its economic growth plummeted to nearly double between 2018 and 2019, from 2.4% to 4.2%, respectively, according to the World Bank. This year, however, has been hampered by the Covid-19 pandemic, enfeebling the world’s financial markets and indomitable economies, including that of Thailand. Recently, the resurgence of political unrest in the country is anticipated to further mar the economy. The Thai economy is projected to regress by 5% in 2020, according to World Bank’s June country monitoring report, considering its openness to trade and its anchor to tourism, which accounts to about 15% of its GDP. General weak demand, globally and domestically, spurred by the outstretched lockdown measures, has impacted Thailand’s key industries including the automotive, travel, energy, manufacturing, and exports, to cite a few. Mobility restrictions from the Covid-19 are starting to be eased and anticipated to jump start economic activities. By 2021, economic growth is expected to rise to 4.1%, and in 2022, to 3.6%; recovery to pre-Covid output levels is also augured in two years’ time, hinged on an effective economic response that will help affected sectors including the vulnerable households and businesses, the World Bank also reported. As well, optimism can be gleaned from its two high-value industries, the automotive and medical devices, which despite the challenges the country is facing continue to thrive.
Thailand, besieged by economic disruptions from the Covid-19 pandemic, and the recent political unrest, is optimistic to post a growth of 4.1% by 2021
Banking on rebound of the automotive sector The global automotive sector has struggled for some years but remains to be Thailand’s ticket to economic recovery. Thailand is Southeast Asia’s automotive hub, honing on its supply and logistics chain. However, the pandemic has shaken up the industry with lockdowns resulting in reduced production in the first half of 2020 by a total 43.1% year-on-year, according to the Thai Automotive Institute data, with the Federation of Thailand Industry (FTI) estimating a 32.9% year-on-year slump in local car sales from January-August this year. But even so, the Covid-19 crisis has not deterred investments activities. In September, Chinaheadquartered Great Wall Motors (GWM) signed a share sales and purchase agreement with General Motors (GM) to acquire GM’s production facilities in Rayong, Thailand. GWM intends to make Thailand its ASEAN production base for export of new energy vehicles and internal-combustion engine models. Production is planned to start in the first quarter of 2021. Elliot Zhang, President, GWM ASEAN & Thailand, added that the engine and vehicle production hub will be renovated and undergo system upgrades, upon the turnover of the assets as part of the signed deal. OCTOBER 2020
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