Report says Thailand’s COVID-19 labor migration may spur economic growth

Rice farmers in Chiang Mai. Photo: Takeaway / CC BY-SA

The Bank of Thailand says that changes in migration due to the pandemic could drive modernization of the agricultural sector and help to better distribute economic growth across the country.

Editorial

As Thailand faces the economic impacts of a third wave of COVID-19, the country’s central bank says that major shifts in labor migration during the pandemic may create long-term benefits.

According to the Bank of Thailand’s new report, waves of domestic migration due to COVID-19 may create an opportunity for new economic growth in regions that have seen relatively little development. 

During the country’s initial shutdown last spring, around 2 million people left Bangkok to return to their hometowns, many of them bringing expertise and technology that are sometimes scarce in more remote regions of the country. This influx of workers with diversified experience and knowledge could help modernize Thailand’s agricultural sector and also develop agricultural and health tourism.

In 2020, Thailand’s GDP shrunk by 6.1%, due in part to a lack of tourists in the country and also to a drop in exports. The country’s economic crisis led to a spike in unemployment; many migrant workers and other low-wage workers in the capital were left without jobs and forced to return home.

“This is a rare opportunity for such a big migration of modern workers, who have knowledge and technology, to return to their hometowns,” wrote Bank of Thailand economist Saovanee Chantapong and Warit Tassanasunthornwong from Thammasat University in the new report.

The potential diversification and modernization could make Thailand’s economy more resilient to shocks like pandemics or other crises. It could also help create a more equal distribution of economic innovation around the country.

The positive spin on massive unemployment stands in stark contrast to Thailand’s treatment of foreign migrant workers during the pandemic. The country has relied in recent years on a workforce of at least 4-5 million migrants from Myanmar, Cambodia, Laos and elsewhere. 

Though these people are crucial to Thailand’s economic growth, they’ve been left in precarious situations as opportunities for work have evaporated and most foreign migrants are excluded from government relief programs. During the pandemic, outbreaks in migrant areas have also sparked public displays of racism against Burmese and other foreign workers.

The release of the Bank of Thailand’s research comes as the country struggles to bring a new wave of COVID-19 cases under control. Thailand has reported more than 2,000 new cases per day for at least five days, for a total of almost 63,000 cases and 188 deaths since the start of the pandemic.

Prime Minister Prayuth Chan-ocha was recently fined 6,000 baht (US$191) for violating a mask mandate now in place for Bangkok and the majority of Thailand’s provinces. A new online petition with over 160,000 signatures has called for Thai Minister of Public Health Anutin Charnvirankul to reign over his mishandling of the pandemic.

Photo: Michael Schwarzenberger / Pixabay

Economists turn to mobile network for big data on migration

The Bank of Thailand report used anonymous data on around 20 million mobile users from True Corporation, which operates one Thailand’s largest mobile networks, to map migration flows during the first waves of the pandemic. In February 2020, people leaving Bangkok accounted for 58% of all migrants. From February through April, 80% of migrants were of working age (21-60 years old).

Saovanee and Warit also compared the changes in migration during COVID-19 to patterns around other economic crises. Overall, surveys by the National Statistics Office appear to show that in the wake of economic crises, those migrant workers that still have jobs are more likely to return home in the off season. After the 2008 financial crisis, the proportion of migrants who traveled home while not working increased from 66% to 74% in a single year.

Historical comparison also suggests that many in Thailand who returned home during the pandemic are likely to stay in their provinces. After the 1997 financial crisis, internal migration within Thailand slowed significantly. In addition, far fewer workers were moving from sectors with low labor productivity, such as agriculture, to high-productivity sectors, such as manufacturing or the service industry.

To support the potential for growth following recent migrations, the report recommended that the government step in to provide resources, including land, technology and expertise.

Thailand’s economy is on a slow path to recovery

A more modern agricultural sector and innovation in rural economies could be especially important as Thailand is still on unsteady ground with regard to economic recovery.

Households across Thailand, including farmers, are straining to pay off increasing debts. As of December 2020, Thai borrowers owed around 14 trillion baht (US$448 billion), equivalent to 89.3% of GDP, representing an increase of 11.2% since 2017. According to Siam Commercial Bank, the household debt-GDP ratio could continue to grow in the first quarter.

“Even before COVID, our debt to GDP was already the highest among emerging markets. It’s above a level that has quite an impact on GDP and household spending,” Yunyong Thaicharoen, chief economist at Siam Commercial Bank, told Reuters.

The prime minister announced plans in late April for a new stimulus package worth 380 billion baht (US$12 billion). Though this would be a fraction of the size of previous government aid bills, it would focus on stimulating local markets and investment as the return of tourism and easier travel into the country remains a long way off.

The Japan Credit Rating Agency (JCR) announced in late April that it still considers Thailand’s economy to be stable and that the country’s strong export sectors and favorable balance of trade remain intact. The JCR pointed to the positive effects of a stimulus package passed by the government in late 2020 that equated to 12% of the country’s GDP.

But as the current surge in COVID-19 infections has grown, the central bank has lowered its GDP growth estimate for 2021 from 3.2% to 3%. Over a year into the pandemic, Thailand’s economy has been slow to turn towards recovery without the benefit of tourist dollars. Any chance to support distributed, modernized growth across the country could go a long way to helping one of Southeast Asia’s strongest economies get back on track.

About the Author

ASEAN Today
ASEAN Today is a leading ASEAN commentary site. Our HQ is in Singapore. We publish business, political and fintech commentaries daily, covering ASEAN and Greater China. Twitter: @Asean_Today Facebook: The Asean Today