Economic recovery could take longer than predicted, central bank says

Thailand’s economy will take longer than expected to bounce back to pre-Covid levels, the Bank of Thailand’s governor, Sethaput Suthiwartnarueput, said on Thursday.

He noted that earlier projections on when the economy could recover could be wrong, as predictions are more complicated than the clear cut figures like GDP, exports, consumption, etc. 

The Bank expects that the economy won’t rebound to pre-Covid levels until at least the first quarter of 2023.

Thailand’s economy contracted 6.1 per cent last year when its vital tourism sector was battered by the pandemic. Hotels, airlines, and other services were the first to implode when the nation closed its borders and implemented strict restrictions. 

However, Sethaput emphasized that the recovery forecast only makes sense “in terms of numbers.”

“If you ask people on the ground whether they feel like things are recovering, or getting back to normal, the answer is probably no,” Sethaput told a virtual forum arranged by the Ministry of Foreign Affairs.

Sethaput said it’s due to an unprecedented downturn in the tourism industry. Bans on international travel resulted in a huge loss of visitors, which contributed to around 12 per cent of the country’s GDP, he added.

As a result, a substantial amount of jobs in the tourism sector were lost due to the absence of foreigners. According to him, tourism accounts for 20 per cent both directly and indirectly to the country’s employment.

A research unit of Siam Commercial Bank, Economic Intelligence Center (EIC), also predicts that Thailand will likely recover to pre-pandemic levels by the middle of 2023.

But Yunyong Thaicharoen, EIC chief economist, predicts that the outbreak of the Omicron variant will affect the tourism sector’s recovery at the end of this year until the first quarter of 2022.

EIC revised Thailand’s GDP to grow 1.1 per cent in 2021 from the previous 0.7 per cent. He also trimmed the projection for 2022, from 3.2 to 3.4 per cent. 

“The slow recovery in the labor market will affect households’ ability to earn income and manage rising debt,” Yonyong warned.


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