BoT says lockdown could take big bite out of GDP


A man walks along the skywalk in front of Terminal 21 mall on Sukhumvit Road, which is nearly empty during the lockdown to curb the spread of the coronavirus. Varuth Hirunyatheb
A man walks along the skywalk in front of Terminal 21 mall on Sukhumvit Road, which is nearly empty during the lockdown to curb the spread of the coronavirus. Varuth Hirunyatheb

The Bank of Thailand predicts the government’s tougher measures to contain new infections will lessen economic activity by a range of 0.8 to 2 percentage points.

The best-case scenario would see GDP fall by only 0.8 percentage points, said the senior director for the economic and policy department, Chayawadee Chai-Anant, while the worst case would mean a dip of 2 percentage points.

This assessment was made on July 16 and is based on the efficiency of the lockdown measures.

If the containment measures are highly efficient and new infections decline by 40%, the outbreak is expected to be contained in August and the government can relax the measures by the middle of August, said the central bank. In this scenario, economic activity would contract by 0.8 percentage points.

If lockdown measures are less effective and new infections drop by only 20%, the government would need to maintain the tougher measures until the end of the year, keeping more people at home, according to the forecast. In this scenario, economic activity would contract by 2 percentage points.

The central bank’s Monetary Policy Committee plans further discussions about growth projections for both this year and 2022, said Ms Chayawadee.

In part because of new government measures to contain the Covid-19 outbreak, including curfews and lockdowns, economic activity has slowed across the country.

“Economic activities under the government’s containment measures for the third-wave outbreak have declined to almost the same level as the first wave in April last year, when the government implemented lockdown measures nationwide,” she said.

The government recently announced a curfew and other tight restrictions in 13 provinces.

The curfew from 9pm-4am and other restrictions have been in force since July 19 in Bangkok, Nonthaburi, Samut Prakan, Samut Sakhon, Pathum Thani and Nakhon Pathom, as well as the southernmost provinces of Narathiwat, Pattani, Songkhla and Yala.

The lockdown was extended to Chon Buri, Chachoengsao and Ayutthaya provinces.

The restrictions include the closure of all stores in malls at 8pm except for retailers deemed essential, such as supermarkets, and those selling medical and communications equipment.

A ban on dining in at eateries continues, while restaurants, wet markets and convenience stores must close from 8pm-4am.

The central bank estimated on June 22 the Delta variant would spread in restricted areas and the government would gradually relax the containment measures in the second half of this year.

Ms Chayawadee said fiscal policy plays a key role in supporting economic momentum.

Government subsidy measures through Finance Ministry packages supported domestic consumption, resulting in a marginal contraction of 1% in 2020, she said.

Without the fiscal measures, domestic consumption would have contracted 6.3% last year, said Ms Chayawadee.



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