Originally Posted by
Seekingasylum
When the banks start hurting from defaulting corporate loans and the barons themselves see their cash reserves dwindling as revenue evaporates then we might see a relaxation of the COVID regime but I should think this will not be as soon as folk would wish or have been hoping for. At present the economic pain of the masses has not yet manifested itself in popular protests which are not gaining much traction in urban areas or even the resorts other than the odd local chamber of commerce reminding the junta that it is in fact a disaster.
The Phuket economy is primarily tourist based and accounts for the majority of employment, principally in the provision of accommodation and services, the lion share of which is in hotels, homestays, guesthouses, restaurants, bars and beach amenities, and of course the supply and distribution of food, water etc. But one must not forget the infrastructural support services that provide the maintenance of utilities, the emergency and police forces, the local amphur administration, etc all of whom are to a considerable degree dependent upon the tourist income for their budgets.
14 million tourists visited Phuket last year but this figure has been wiped out this year and is likely to fall to less than 4 million comprising mostly domestic trade. 400,000 people are directly employed in tourism and over 80% of the economy is based exclusively on the tourism sector.
Essentially, another year of quarantine will reset the clock on the island back 20 years.
The real kicker is of course the runaway boom throughout Thailand in construction that has been fuelled by optimistic projections in revenue, most of which was funded by debt leveraged by the banks. A 10% contraction in the economy overall with up to a 70% collapse in the tourist trade slashing its GDP contribution from 15-16% to as low as 4-5% will require substantial subsidy by the government but in the end there will be defaults and profits right across the board including dividends will vanish.
The UK has estimated COVID will cost the economy over £600 billions in subsidies and welfare in one year alone. Obviously, Thailand will not ameliorate its losses to that degree but public expenditure will increase however it will not be investment but a band aid stuck on a bleeding artery.
Phuket is screwed.
Still, silver linings are there to be had and one could reasonably speculate that the baht will lose value as time passes.