How to hide widget if current category has no posts assigned to it?

It might be you’re using the category on a custom post type, in that case category_count won’t include those. There’s another handy value on the $category-object however: $category->count. Try replacing this:

$postcount = $thiscat->category_count;

with this

$postcount = $thiscat->count;

The count attribute includes custom post types as well if the custom post type uses standard categories.¹