Minutes of the latest MPC’s meeting said some workers may be temporarily unemployed during the containment period, while others could be permanently unemployed due to business insolvencies resulting in shutdowns, layoffs from weak demand, or greater use of automation.
"These would delay the economic recovery and reduce the long-term potential growth, causing lasting economic scars after the crisis. The committee would therefore closely monitor developments in the labour market,” it said.
The policy committee said Thailand’s economy will contract more than expected this year.
It said export of services would contract more due to a sharp decline in tourist figures caused by potentially extended travel restrictions, while merchandise exports would contract more than assessed in line with the trading partners’ economic outlook.
The contraction in oil prices would also affect the export prices of petroleum-related products, it added.
"The fall in external and domestic demand resulted in widespread declines in business and household incomes. Private consumption would contract from higher unemployment and the containment measures.
"Nevertheless, relief measures from the government and related agencies would partially shore up household purchasing power,” it said.
The MPC also expressed concerns over the baht that could strengthen and affect the country’s economic recovery.
"The committee would closely monitor developments in the financial markets and the foreign exchange markets, as well as the results of the implemented measures to relax regulations on capital outflows.
"The committee would examine measures to lessen pressures from gold exports on the baht.,” it said.
Thailand cut its policy rate for the third time this year to a fresh record low, from 0.75 to 0.50 per cent to halt economic fallout caused by Covid-19.
The Bank of Thailand (BoT) will update economic forecasts at its June 24 policy review.
In March, BoT predicted the economy will shrink 5.3 per cent this year, the biggest contraction since the 1997 Asian financial crisis. - Bernama
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