Growth forecast overly optimistic, Bank of Thailand warns

The latest outbreak of Covid-19 in Thailand could pull economic growth lower than the 3.2 per cent estimated by the government for 2021, the central bank said Friday, citing the renewed impact of the pandemic across sectors.

Many businesses and households have insufficient capacity to handle the losses from the latest disruption of business activities, the Bank of Thailand said. Some groups will see particularly steep declines in income, especially the services sector, it said.

“Some groups that already have a weak financial position, such as the tourism sector, will be further affected, along with the 4.7 million workers in the red zone,” the statement said, referring to the 28 highly controlled provinces under the strictest measures.  

Of those 4.7 million workers, 1.2 million are likely to become unemployed, said the bank. The pandemic has caused some manufacturing firms to suspend activities after some migrant worker employees were infected.

The 28 provinces in the red zone account for around 75 per cent of total Thailand’s gross domestic product, according to a 2019 figure of the National Economic and Social Development Council.

The central bank also said the financial status of many low-income households has been made further fragile by a recent drop in savings and by income instability.

Looking forward, the bank said the economic outlook “is still uncertain depending on the vaccination progress in Thailand and more stimulus measures to support the economy.”

However, it said the impact on the domestic economy would likely be less severe than the previous outbreak due to less strict measures and the clearer development of the vaccines.

Nonetheless, it said, growth for 2021 was likely to be less than the most recent government prediction of 3.2 per cent, urging the government to roll out assistance for businesses and workers in the vulnerable groups.

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