From his dusty Bangkok pawnshop, where gold deposits are still recorded in heavy wooden ledgers, Danai Tangvatanangkoon has had a ringside seat to decades of Thai economic crises.
But since opening his business in 1989, nothing compares to the current crunch, he said, with forfeited power tools and watches stacking up as the economy crumbles under a third wave of the Covid-19 pandemic , the deadliest yet to hit Thailand .
“People don’t have anything left to pawn. Our sales are even worse than the Tom Yum Kung crisis,” he said of the 1997 financial meltdown, which wiped out the savings of millions of Thais before spinning out across Southeast Asia.
“At least then people still had their jobs … now they have nothing.”
Last month the Bank of Thailand slashed its 2021 GDP growth forecast from 3.0 to 1.8 per cent and the 2022 outlook by nearly a percentage point, forecasting an absence of tourists as the virus continues to spread.
That estimate now looks optimistic in a country where just over 5 per cent of the 70 million population has been fully vaccinated, leaving the government of Prayuth Chan-ocha struggling to bat down the pandemic while dealing with public anger over the slow vaccination roll-out.
Covid-19 cases are surging to unprecedented levels, topping 11,000 daily infections for the first time over the weekend. On Tuesday, Thailand reported 11,305 cases and 80 deaths, as health officials prepare for the caseload to double by early August.
Bangkok has essentially been closed down since early this month while domestic flights have been suspended and city checkpoints ramped up to prevent all but essential travel from the capital.
This has crushed the economic activity which had flickered back to life between the end of last year and April and left an untold number of informal sector workers – from fruit vendors to trinket sellers to masseuses – out of work. Household debt has surged to a dangerous 90 per cent of GDP.
To turn the corner, Prayuth pledged to reopen the country in October. But that now looks unlikely.
“This could mean a V-shape, or even a U-shape recovery that we see in other countries with rapid recovery after vaccination, is still a far-fetched dream,” said Pavida Pananond, an associate professor in the Department of International Business at Thammasat University.
While tourist destinations Phuket and Koh Samui have reopened, industry observers say visitors are unlikely to flood back in significant numbers to an unvaccinated kingdom battling a pandemic.
The World Bank this week said visitor numbers by the end of the year are likely to be closer to 600,000 rather than the estimated 4-5 million before the latest virus surge.
Hopes of salvaging the economy now hang on economic stimulus. Thailand has secured 1.5 trillion baht (US$45 billion) to pump into the economy, with the latest tranche of US$15 billion agreed in May to be dispersed over coming months.
The first round of stimulus secured last year stopped “the economy sliding further”, Finance Minister Arkhom Termpittayapaisith told reporters last week, raising the prospect of yet more borrowing as the pandemic continues to strangle consumer spending.
“Recovery may not be as immediate as we would have hoped,” he conceded, adding the government is considering a further debt repayment holiday until next year to allow businesses to pick themselves up.
During normal economic downturns, pawn shops flourish as customers borrow in the short-term against their goods to cover sudden cash shortages and then make repayments as their circumstances improve.
This time is different, said Danai, as his customers sink deeper and deeper into debt. People are failing to meet the five-month repayment period to get their goods back, with many unable to afford even the 1.5 per cent interest payment.
“We’re extending contracts to six or seven months, which means their things are sitting with us longer but we’re not able to make any money on it either,” said Danai.
Thais have long been some of Asia’s heaviest borrowers, and have amassed a mountain of personal debt worth around 14 trillion baht (S$582 billion), much of it accrued before the pandemic pushed the economy over the edge.
“Rapid inoculation, appropriate testing and tracking, along with targeted stimulus are key to economic recovery,” Pavida said, explaining the government “has failed miserably on the first two”.
“In the longer run, Thailand needs to evaluate how economic resilience can be achieved. Heavy dependence on tourism and exports has cost the country dearly in the past two years,” said Pavida.
But at street level, Danai sees the signs for recovery as being bleak.
“You know things are bad when the office workers have pawned off their gadgets, phones and notebooks,” he said.
“People have nothing left.”
This article was first published in South China Morning Post.