July lockdown to cost the country an additional 140 billion baht, shave 1.6 per cent off GDP

The government’s decision to lock down Bangkok and hard-hit provinces in July will cost the country an additional 140 billion baht, an analyst said on Wednesday.

The government has banned dining-in and closed public spaces until the end of July in Bangkok, some surrounding provinces, and hard-hit southern provinces in a bid to curb the third wave of the Covid-19 pandemic.

The third wave of the pandemic has infected over 225,000 people since April 1 and has killed nearly 2,000 people as the government struggles to bring numbers under control.

The Prayut Chan-ocha administration has introduced staggered lockdown measures including shutting down construction sites and public gatherings.

The move will cost the country up 160 billion more baht in addition to the 62 billion baht hit on monthly revenue the country was already seeing due to closed borders.

That means, July’s shutdown will likely cut some 1.6 per cent off the annual GDP, said Maria Lapiz, the Head of Institutional Research at Maybank Kim Eng Thailand.

“Construction and construction-related [businesses] will be hit this time as delays drain working capital financing,” she said in a note to clients.

Construction firms have suffered for the past two days on the stock exchange as investors shied away from a sector that might not recover at the end of the month.

According to sources within the government, the lockdown could extend beyond July if the situation does not improve.

Thailand’s central bank lowered the country’s GDP projections last week to 1.8 per cent down from 3 per cent predicted in March.

The Monetary Policy Committee at the central bank reduced its estimate of gross domestic product (GDP) growth in response to a downturn in international tourists and lower domestic demand impacted by the third wave of Covid-19 pandemic.

It is unclear how the lockdown could further reduce growth projections.

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