Economy now likely to contract this year, central bank official warns

Control measures in Bangkok and the rest of the dark-red zones, designating the tightest Covid-19 restrictions, could cost Thailand as much of 2 per cent of its gross domestic product this year, the central bank said on Thursday.

“As the impact on the economy is way larger than estimated, the Thai economy is more vulnerable than the previous projection in June,” Chayawadee Chai-Anant, senior director at the Economic and Policy Department, told a briefing.

Chayawadee said that GDP was likely to contract by 0.8 to 2 per cent following the restrictions, which have dampened economic activities.

The most recent formal assessment for economic growth from the central bank was 1.8 per cent for the year, made in June. Most research units from commercial banks have cut their growth projection to around 1 per cent of gross domestic product. Some even predicted a contraction in the worst-case scenario.

The central bank must keep an eye on other factors such as fiscal initiatives and exports that may support GDP before revising its own official forecast, said Chayawadee.

Meanwhile, the Finance Ministry is also reassessing its economic projection in light of the recent lockdown, and will announce an adjusted number on July 29.

The government this week added Ayutthaya, Chachoengsao, and Chonburi to the list of areas subject to strict regulations encouraging residents to stay indoors as much as possible. Other locked-down provinces are Bangkok, Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan and Samut Sakhon, Narathiwat, Pattani, Songkhla and Yala.

“Thailand’s economy may require a longer time to revive,” Chayawadee warned.

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