Concerns looming over larger economic impact

Novel challenges: A file picture showing a healthcare worker taking a nasal swab sample. The Thai central bank is watching closely to see whether the government can contain the outbreak. — Reuters

BANGKOK: The Bank of Thailand (BoT) has listed three concerns for economic recovery now that Thailand and other countries have been hit by a new surge in Covid-19 cases.

The fresh outbreak may disrupt the recovery more than calculated in the central bank’s Dec 20 assessment, Chayawadee Chai-Anant, senior director of the BoT’s economic and policy department, warned.

The central bank is watching closely to see whether the government can contain the outbreak, she said.

The second concern is that Thai exports may be hit hard by fresh lockdown restrictions imposed abroad, she warned.

The third concern is the Thai labour market. The job market’s recovery remains very fragile, with unemployment still high and compensation payments not dropping, she pointed out.

Jobless workers in the social security system accounted for 7.8% of total unemployment in November, compared with 8.1% in October.

Those receiving compensation payments accounted for 4.7%, little change from 4.9% in the month before. Those working less than 20 hours per week both in farm and non-farm sectors dropped slightly to 2.2 million last month from 2.5 million in October.

The weak labour market indicates the economic recovery does not have a broad base, said Chayawadee.

Partial economic recovery in November was driven by government stimulus while contraction of exports decelerated to 2.3%.

The baht appreciated sharply in November after Joe Biden won the US presidential election and vaccine development advanced – good news that fuelled capital inflows into Thai stock and bond markets.

The baht’s appreciation decelerated in December as the US dollar rebound, she added.

Separately, Thailand’s manufacturing production index rose 0.35% in November from a year earlier, for its first annual increase in 19 months.

The index also rose 1.77% from last month driven by a 10.2% growth in auto manufacturing, said the Industry Ministry.

The figures showed Thai manufacturing was on the path to recovery after being hit by the trade war and Covid-19 outbreak, said Thongchai Chawalitpichaet, director-general of the ministry’s Office of Industrial Economics.

Global economy recovery aided by stimulus packages had boosted orders for Thai-made products, resulting in a smaller export contraction of 0.87% last month, he added.

He expected December’s PMI to match November’s level, if authorities can contain the latest virus outbreak.

Overall in 2020, the PMI is expected to contract by 8% but then grow by 4%-5% next year, he said. — The Nation/ANN

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