The new Covid-19 outbreak, which stunned Thai people with a new hardly controlled virus variant, continues to raise more concerns over economic health, adding fiscal-monetary burdens to the government, now likely to see GDP miss its target.
The Federation of Thai Industry (FTI) on Thursday warned the government against a prospect to earn, or borrow more money to boost the economy.
FTI vice-chairman Kriengkrai Thiennukul said ongoing stimulus packages, including Rao Chana (We Win) and co-payment schemes, will not have enough power to restore the economy and increase people’s purchasing power as it is unclear whether the country can quickly bring the new outbreak under control.
“Thai people are about to celebrate the Songkran festival which is hoped to help stimulate spending, but today they are plunged into disappointment over the state action against the pandemic,” he said.
FTI expects people’s purchasing power and business confidence will remain low for a long period this time, making it more difficult to shore up the economy.
“The outbreak may affect the state plan to re-open the country by allowing vaccinated tourists to visit Phuket without quarantine this July. Officials may need to delay the plan,” said Mr Kriengkrai.
FTI called on the government to impose strict measures to control the outbreak during the festival when people usually make trips around the country for fear that the daily infection rate will increase after the long holidays.
The government earlier cut its growth forecast from 3.5-4.5% to 2.5-3.5% this year though data showed the economy shrank less than expected from October to December after the easing of lockdown measures last year.
The Finance Ministry’s Fiscal Policy Office (FPO) is still maintaining its economic growth forecast at 2.8% this year, compared with a 6.5% contraction in 2020, with full-year foreign tourist arrivals at 5 million this year.
A source from the ministry who requested anonymity said the extent of a fresh round of infections hinges on how far the government can effectively contain the spread, adding tightened lockdown as launched in the first wave would definitely affect economic activities and overall economic growth.
The source said Thailand’s efficient public health system can keep the fresh round of infections under control given the experience handling the first two rounds. More importantly, vaccines are made available in the country.