Almost 5m workers hit by delayed economic recovery after new Covid wave: BOT
The new wave of Covid-19 will delay Thailand’s economic recovery and affect 4.7 million workers, a senior official at the Bank of Thailand (BOT) has warned.
Chayawadee Chai-Anant, senior director in the BOT economic and policy department, said though the second wave of infections is not as severe as the first, it would still delay economic recovery to pre-crisis levels – possibly till late next year.
“The recovery will be a K-shaped, not V-shaped, but if government measures are effective, it will be close to a V-shape recovery,” she told a seminar hosted by the World Bank yesterday.
The government has limited lockdowns and restrictions to specific locations after the fresh outbreak in December, while also launching new aid measures that are smaller in scale than in the first virus wave early last year.
The Thai economy showed signs of recovery in the third quarter last year, but the second wave of infections has disrupted that trend.
“Thailand’s economy could return to pre-crisis level in mid-2022, or the recovery may be delayed to late of 2022,” said Chayawadee.
Tourism-related sectors such as restaurants, hotels and transport would feel the brunt of the new outbreak as they have yet to recover from the first wave, she added.
The second wave will hit 4.7 million workers hard, costing either their jobs or reducing their hours along with their income, according to an initial assessment by the central bank and business sectors.
Chayawadee said three key factors needed to be closely monitored.
The first factor is how long the pandemic will last. Second is the effectiveness of government aid measures, and third is how Thailand will open the country to foreign arrivals. Linked with the third factor is the scale of vaccination in the country.
Tourism-related industries are now facing surplus capacity in transport and hotels after tourist arrivals fell to around 7 million, from 40 million before the pandemic. New aid measures must be targeted to reach people in need, she said.
Somprawin Manprasert, chief research economist at Krungsri Bank, said the urban poor are facing the biggest impact from Covid-induced crisis, while high-income groups have been only slightly affected. “The government does not have adequate policy tools to deal with the Covid fallout,” he added.
Pisit Puapan, executive director of the Fiscal Policy Office’s macroeconomic policy bureau, insisted the government has adequate financial resources to deal with economic impact. Thailand’s fiscal position is relatively strong given public debt was only 42 per cent of GDP as recently as 2019, he said. However, he acknowledged that this figure is now climbing, with Thai public debt now close to 60 per cent of GDP.
The government has set sustainable debt-to-GDP at 60 per cent, but that limit could be raised in the future if the country needs to spend more on productive projects, he said.
The World Bank projects the Thai economy will rebound to 4 per cent growth this year and up to 4.7 per cent next year, from an estimated 6.5 per cent contraction last year.
Birgit Hansl, World Bank country manager for Thailand, has called for more women to join the workforce. Thailand should also increase labour productivity, given the country is becoming an ageing society, she said.