Economy at risk of contraction in Q3: Krungsri Research
Thailand’s overall economy is at risk of contraction in the third quarter due to restrictions on economic activities to curb Covid-19 from spreading further, Krungsri Research revealed on Wednesday.
In its monthly economic report, Krungsri Research said the private sector’s consumption index in July contracted -5.3 per cent from the previous month after weakened purchasing power due to restricted economic activities under the government's anti-Covid orders.
“This has also brought down the consumer confidence index and private investment index, the later by -3.8 per cent month on month, especially in the machinery and construction sectors,” it said.
“Exports still have the potential to expand although the trend started to slow down due to a surge in Covid-19 infections in some of the countries which are our trade partners,” Krungsri Research said.
“Meanwhile, the industrial output index has contracted -5.1 per cent from the previous month due to low demand and a temporary halt in operations at factories where clusters have been found.”
Krungsri said that although the Phuket tourism sandbox opened in July, the number of foreign visitors to the province so far has been recorded at only 18,056, significantly lower than its tourist statistics before the outbreak.
“We estimate there is a high probability that the economy in the third quarter will contract from the previous quarter, which will be the first contraction since the second quarter of last year,” said Krungsri Research.
“The major contributing factor is the government’s use of strict disease control measures in 29 ‘dark red’ provinces in early August, as most of these provinces are manufacturing bases.”
Krungsri Research also estimated that without further government aid, up to 27.6 per cent of businesses will suffer from liquidity problems, which may eventually lead to permanent shut-downs, while 9.3 million workers are at risk of either having their salaries reduced or losing their jobs altogether.