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2289-Impact of COVID 190 On L PDF
2289-Impact of COVID 190 On L PDF
KIRIDA
BHAOPICHITR
15 July 2020
• Earliest planned completion date for COVID-19 is September 2021.
• After successful phase II, once safety has been established, vaccines could be granted emergency
use, e.g. for frontline health workers.
Vaccines currently undergoing clinical trials
Type: Protein Based Type: Protein Based Type: Virus Vector Type: Virus Vector
PROGRESS PROGRESS PROGRESS PROGRESS
Phase I – Nov 2020 Phase I/II – Jan 2021 Phase I – Jan 2021 Phase I – Jun 2021
Phase II – Feb 2021 Phase II/III – Sep 2021
Type: Genetic Vaccines Type: Genetic Vaccines Type: Genetic Vaccines Type: Genetic Vaccines
PROGRESS PROGRESS PROGRESS PROGRESS
Phase I – July 2020 Phase I – May 2021 Phase I/II – Aug 2021 Phase I – Nov 2021
Phase II – Apr 2021
SINOPHARM
Type: Inactivated Virus Type: Inactivated Virus Type: Inactivated Virus
PROGRESS PROGRESS PROGRESS
Phase I/II – Nov 2021 Phase I/II – Oct 2020 Phase I/II – Sep 2020
Source: Vaccine Centre, London School of Hygiene & Tropical Medicine and New York Times 2
• World Bank projects the global economy to contract by 5.2% in 2020, much worse than during
the 2008-09 global financial crisis, as advanced economies in the West contract by 7%.
• Global economy will grow slowly next year, reaching pre-COVID levels only in late 2022 at
the earliest, and grow modestly thereafter; advanced economies, however, will not recover to
pre-COVID levels until 2023 at the earliest.
GDP Growth Forecasts by World Bank
RUSSIA
WORLD Growth in 2020 2021
Growth in 2020 2021
EURO AREA
2019
1.3% -6.0 2.7 % %
2.4 -5.2 4.2
2019
(1.6%) (1.8%)
% % % Growth in 2020 2021
(2.5%) (2.6%) 2019
1.2% -9.1 4.5 % %
CHINA
ADVANCED ECONOMIES USA (1.0%) (1.3%)
Growth in 2020 2021 JAPAN
2019
1.6%
Growth in 2020
-7.0% 3.9%
(1.4%)
2021
(1.5%)
2019
2.3%
Growth in 2020
-6.1 4.0 %
2021
%
MIDDLE EAST
AND NORTH AFRICA
2019
6.1% 1.0 6.9 %
(5.9%)
%
(5.8%)
2019
0.7%
Growth in 2020
-6.1 2.5 %
2021
%
(1.8%) (1.7%)
Growth in 2020 2021 (0.7%) (0.6%)
EMERGING MARKET AND
DEVELOPING ECONOMIES
2019
-0.2% -4.2 2.3 % %
INDIA EAST ASIA
AND PACIFIC
Growth in 2020 2021 LATIN AMERICA (2.4%) (2.7%)
Growth in 2020 2021 (excluding china)
2019
3.5% -2.5% 4.6% AND THE CARIBBEAN 2019
4.2% -3.2 3.1 Growth in 2020 2021
(4.1%) (4.3%)
2019
0.8%
Growth in 2020
-7.2 2.8 %
2021
%
%
(5.8%)
%
(6.1%)
2019
4.8% -1.2 5.4 %
(4.9%)
%
(5.0%)
(1.8%) (2.4%)
Note: shows increase/decrease compared to previous year; Number in bracket is forecast in January 2020; Size of circle is the size of economy
Source: Global Economic Prospects (June 2020), World Bank and TDRI calculation 3
• Thai economy could contract by 10% this year and will not reach pre-COVID levels until 2023
as exports, tourism and domestic consumption will only start to pick up once the COVID-19
pandemic ends.
• Post-COVID, exports will be affected by lower Household debt
global purchasing power and higher trade Household debt % of GDP (right axis)
barriers; tourism will recover to pre-COVID 13.6 80
levels only in 2023 when the pandemic is 13.4 79.5
behind and international movements of 13.2 79
people fully resume.
Trillion baht
13 78.5
4
NEGATIVE IMPACT ON BUSINESS POSITIVE IMPACT
HIGH MODERATE LOW ON BUSINESS
employees
>1 Million
• Shopping malls
• Hotels • E-commerce (Food,
• Retail shops
online Marketplace, etc.)
IMPACT ON EMPLOYMENT
• Wellness, Spa
banking, movies, etc.)
employees
Source: BOT, Bangkokbiznews, Thansettakij, marketingoops, Phatra, SET, TRIS, TDRI analysis 5
• Jobs of 9.7 million people are severely affected by the lockdown from Covid-19 outbreak, with
the largest group being retailers followed by cooks & waiters, hair dressers, tour guides and taxi,
van and motorcycle drivers.
Employed persons impact from COVID-19 by occupation (Million persons) Low impact
Low impact occupation* 12.1 million persons
Agriculturists 11.8 Moderate impact
High-skill Technicians, tailors
Retailers
3.9
5.1
15.6 million persons
• Rice prices will rise by around 10% this YoY Growth of Farm income by Crops (2020)
year, while rubber and sugar price falls 30
Price Production Farm income
Feb
Feb
Feb
Feb
Feb
Feb
Jan
Jan
Jan
Jan
Jan
Jan
Jan
remittances from non-farm family Total Fruits Fowl Sugarcane Swine Rubber Paddy
members. Source: Office of Agricultural Economics with TDRI calculation 7
• Public Debt Management Office projects public debt to GDP to reach no more than 58% this fiscal
year (includes Bt0.6 trn out of the Bt1 trillion borrowing bill, which will borrowed this fiscal year).
• The Government has so far provide cash Public debt
transfers of almost Bt350 billion to almost 30 (Fiscal year)
10
million individuals. 8.2
• There is room for further government 8
6.8 7.0
borrowing of up to 60-65% of GDP or another
Trillion baht
6
Bt 0.8-1.5 trillion, if needed.
• But if the economic slow down extends 4
demand and prepare for the post-Covid world. Source: Public Debt Management Office with TDRI calculation
8
Domestic tourism • Domestic tourism will start recovering in Foreign tourism • International tourism will start to
Q3/2020 with FIT, seminars, conferences, slowly recover end-2020 with focus
and leisure travel; it will not fully recover on selected business and medical
to pre-COVID level until 2022. travelers.
• Government’s domestic tourism stimulus • Foreign tourists who are vaccinated
packages of Bt22.4 billion from July to can start to come in 2022.
October 2020 will also help. • Full recovery will not be until 2023
100
90 the global financial crisis of 2009 (GFC);
80 shortened supply chains will also reduce
70 global trade post-COVID.
60
• Linkage between global trade growth and
50
economic growth will be weaker; Thai
40
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 export growth will unlikely reach 5%
Source: WTO post-COVID.
10
11
POVERTY REDUCTION GLOBALIZATION
• COVID-19 pushed millions into extreme poverty • Leaders will prioritize domestic over global issues,
especially in most affected areas (South Asia & leading to nationalism & protectionism.
Sub-Saharan Africa) • Tariff rates likely hiked as in previous crises
• Implications: Reduced purchasing power • Major powers act unilaterally, while
international organizations (e.g. WTO. WHO,
COVID-19 added millions into extreme poverty globally UN) lose influence.
740
Millions of people in extreme poverty
Percent
20 2.0
15 1.5
Additional people driven into extreme poverty 10 1.0
Millions 0.9 during COVID-19 pandemic 5 0.5
4.5 2.7 2.8 15.6 22.6 0 0.0
of people
Japan
Japan
Germany
Germany
UK
UK
USA
USA
France
France
East Asia & Pacific Europe and Central Asia Latin America & Caribbean
Middle East & North Africa South Asia Sub Saharan Africa
Source: Lakner et al (2020), PovcalNet, World Bank Global Economic 2020 Prospects, Source: Barry Eichengreen and Douglas A. Irwin (2009), “The Great Depression
and the Protectionist Temptation: Who Succumbed and Why?” and World Bank 12
INCREASING INEQUALITY RISING POLITICAL TENSION
• Informal workers tend to lose more wealth President Trump Job • COVID-induced inequality
because of inaccessibility to government support. Disapproval create political instability and
1,000 cases potential chaos.
• Poor households are less likely to work from 54
home, so they benefit less from efficiency gains. 52
• Implications: rise of populist
government worldwide and
• Low skill workers will have difficulty finding jobs 50
48 reversed globalization.
• Implication: Lower purchasing power Jan Feb Mar Apr May Jun Source: RCP
Jan-19
Jan-20
Apr-20
Oct-18
Oct-19
Jul-18
Jul-19
Source: Office of Industrial
Economics. 15
16