KBank Subsidiaries and ASEAN Economic Strategy
K
KASIKORNTHAI
Operating Environment: Economic Outlook for 2020
% YoY
6.0
3.0
0.0
-3.0
-6.0
-9.0
-12.0
Key GDP Forecasts and Assumptions
4.1
2018
% YoY
2.4
2019
2020F*
-10.0
2020F
2020F*
(Previous)
2018
2019
Base Case Base case
GDP
4.1
2.4
-6.0
-10.0
Private Consumption
4.6
4.5
-2.3
-3.3
Government Consumption
1.8
1.4
2.0
2.3
Total Investment
3.8
2.2
-4.5
-7.9
Private investment
3.9
2.8
-6.6
-12.1
- Public investment
3.3
0.2
3.1
6.0
Gov't Budget Deficit (% of GDP)
-3.0
-2.9
-4.1
-5.2
Exports (Customs Basis)
6.9
-2.7
-6.1
-12.0
Imports (Customs Basis)
12.1
-4.7
-10.9
-16.8
Current Account (USD bn)
28.5
37.3
24.8
15.5
Headline Inflation
1.1
0.7
-0.5
-1.2
Policy Interest Rate**
1.75
1.25
0.50
0.50
Notes: MPC's policy rate is at 0.50% (as of August 5, 2020)
Key Points:
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■Given escalating downside risk from global economy,
KResearch revised down the GDP forecast for 2020 to
-10.0% from the previous forecast of -6.0%.
■Government spending will be the only growth driver of
the Thai economy
■In emergency situations, fiscal and monetary space
are available for further execution, but policy
effectiveness should be the focus
Risk Factors:
■COVID-19 outbreak resurgence and uncertainty in
vaccine development
■Thai Baht appreciation
■Trade tensions and geopolitical risks
■ Household and business balance sheet deterioration
if the outbreak lasts longer than expected
represents a lower base case assumption, comparing with the previous forecast
represents a higher base case assumption, comparing with the previous forecast,
Source: *KResearch (as of August 28, 2020 vs forecast on June 2, 2020)
**KBank Capital Markets Research (as of August 10, 2020)
บริการทุกระดับประทับใจ
K
KASIKORNTHAI
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开泰银行 KASIKORNBANK
Operating Environment: Economic Outlook for 2020
■Global Economy
■Government Stimulus Plan
(App. pages 136-157)
■Inflation
(App. pages 160 and 162)
■ Exports and Tourism
(App. pages 160, 163-166)
■Fed Policy Normalization
(App. pages 172)
Outlook
■Global economy: The global economy is projected to contract sharply in 2020 and
slowly recover in 2021, given escalating downside risks
■US: The US economy will enter a recession in 2020. Facing a raging second wave
outbreak, the US economy will continue to be under great pressure in the second half of
this year; a full economic recovery remains distant
■ Eurozone: The Eurozone may enter a deep recession in 2020. Even though economic
confidence is slowly picking up, full recovery is still a long way off
■China: With the COVID-19 hitting global demand and continued outbreaks of the virus
not ruled out, the economic rebound may prove hard to sustain. China's GDP growth in
2020 could possibly sink to a historic low
ASEAN economies: Risks to the ASEAN economies are increasingly tilted to the
downside, given the global economic slowdown and rising trade tensions
■Government may roll out additional short-term stimulus packages at a large scale to
offset economic pressure caused by the outbreak
■Government investment projects may be delayed due to potential shortage of capital
goods amid disrupted global supply chain
■Inflation is expected to fall to -1.2%, given a slump in domestic and external demand as
well as a slide in oil prices
■Thai exports could contract deeply amid likely global recession and disrupted supply
chains
■Tourist arrivals in 2020 could drop by 82.4% to 7.0mn, from 39.8mn in 2019, leading to
tourism revenue loss of around Bt1.6trn this year
■A second wave of COVID-19 in the US will mean a longer recovery for the US economy
■The COVID-19 outbreak, existing US-China tensions, and US election uncertainty are
expected to impact US economic growth and pressure the Fed to keep its ultra
monetary easing rate of 0.00-0.25% and its quantitative easing throughout the year
Possible Impacts to Thai Economy
Even though the outbreak situation in Thailand has
significantly improved, the Thai economy is still highly
vulnerable to global economic malaises and
weakened purchasing power at home
The global recession, combined with appreciation of
the Thai Baht, will continue to pressure Thai export
and tourism sectors, further impacting the Thai labor
market
■Consumption and investment in Thailand could
deteriorate drastically
■Thai economy may contract 10% this year, given
escalating downside risks
■Supportive fiscal measures may help sustain domestic
activities to some extent
■Monetary policy is expected to remain accommodative
to economic growth throughout 2020
■Thai government may need to implement targeted
measures to alleviate the loss in tourism and export
sectors
BOT may maintain its interest rate at a record low of
0.50% in 2020, from 1.25% in 2019, after 3 rate cuts
in 1H20. Thai economy in 2020 has been hit by the
COVID-19 outbreak, while government spending
remains soft
■Baht (App. pages 159)
■COVID-19 border restrictions impact inbound tourist revenue, but the Thai current
account in 2020 will remain in surplus, due to a trade surplus
■ As a deflationary pressure, higher Thai real interest rate will encourage capital inflows to
Thai bonds, after more monetary easing by major central banks
Source: KResearch and KBank Capital Markets Research (as of August 28, 2020)
บริการทุกระดับประทับใจ
■In 2H20, the Baht should strengthen due to the
weakening US dollar, expected stability in the BOT
rate, and strong Thai economic fundamentals, such as
high current account surplus, low inflation, and high
global liquidity
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