Central bank to cut growth forecast after second Covid wave

Central bank to cut growth forecast after second Covid wave

People wearing face masks shop for street food in Yaowarat on Jan 6, amid the spread of the coronavirus disease in Thailand. (Reuters photo)
People wearing face masks shop for street food in Yaowarat on Jan 6, amid the spread of the coronavirus disease in Thailand. (Reuters photo)

The Bank of Thailand said on Friday it might cut its growth forecast for this year in response to a recent coronavirus outbreak, although the impact on economic activity has been less than the first wave of infections.

The new wave, which has seen case numbers almost triple in the last month, could lower the country's gross domestic product by 1.0-4.0%, depending on its severity and the effectiveness of containment measures, said BoT senior director Chayawadee Chai-Anant.

The BoT on Dec 23 lowered its 2021 GDP growth outlook to 3.2% from 3.6%, which Ms Chayawadee said had taken into account some virus impact.

"But we may have to revise that down because we did not expect the spread would be this fast," she told a briefing.

If the current measures, which allow most economic activities, are maintained for two months and relaxed by June, it could impact GDP by 1.0-1.5%, she said.

But if the outbreak worsens and strict measures are imposed, GDP will be hit by 3.0-4.0%, she added.

Thailand has recorded just 11,450 coronavirus cases and 69 deaths so far. It is averaging about 232 new daily cases, having gone several months last year without community transmission.

The recent outbreak, which saw infections in 60 of Thailand's 77 provinces, could also impact more than 4.7 million workers, Ms Chayawadee said.

The restrictions will likely derail the economy's nascent recovery, according to some analysts, who have lowered this year's growth outlook to below 3%.

While the outlook remains uncertain, tourism, a key growth driver, will gradually recover in the second half of this year, while exports should also grow as the economies of trading partners improve, the BoT said in a statement.

In 2020, the country may have contracted 6.6%, according to the BoT, the weakest in over two decades.

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