Thai economy expected to contract in 2020, but will recover next year
The Organization for Economic Co-operation and Development, or OECD, has published its assessment of the Thai economy, saying that the pandemic has interrupted Thailand’s socioeconomic progress.
In its recent 163-page report, the OECD said Thailand has made impressive economic and social progress over the past decades, thanks to a strong policy framework, business friendly climate and attention to people’s well-being but, as in some other countries, the COVID-19 pandemic might send Thailand’s economy into a severe recession soon.
The economy will bounce back
Experts project that economic growth will contract sharply this year, but will bounce back in 2021, because Thai government has managed the outbreak well. The lockdown measures, however, have suppressed domestic demand and weak employment prospects weigh on the confidence of businesses and households. So, the recovery will be slow and will leave scars on long-term productivity.
Though macroeconomic policies have been supportive, the future course of the outbreak is still highly uncertain. The OECD suggests the Government should look in to investments that will strengthen the healthcare system and prepare for a second wave of COVID-19, should it happen, including increasing protection and testing capacities.
The report focuses on informal workers, particularly women in Thailand, who are described as “vulnerable workers” with a lack of access to sufficient social protection or training opportunities. The report suggests that the Thai Government develop measures to up-skill and re-skill this group of workers, and make the post-outbreak economy more inclusive and productive.
The report concluded that the skill requirements of the labor market have not been assessed in a regular and systematic way. The government should develop tools to regularly assess the skills needed at the national, regional and sectoral level, to enable development of human resources with the appropriate skills.
Access to education
The OECD praises Thailand for expanding access to education. Participation in general education is high, especially at the primary level. Additionally, the number of out-of-school children has fallen since the turn of the century, but many children from the poorest families still do not attend school, and the exclusion rates are highest in rural areas.
The service sector has become important and essential to international trade. Statistically, the service sector in Thailand is more strictly regulated than in other Asian countries, so much so that it hinders expansion. The report suggests that Thailand should try to remove barriers, particularly regarding the international mobility of skilled workers, by expanding the coverage of the Smart Visa.
Foreign direct investment (FDI) is essential to expand the export of services. Restrictions on inward FDI have been eased in manufacturing, but not enough in the service sector.