BoT says confidence key to spurring recovery
Public confidence will be a key factor in boosting the economy after the government eased its strict Covid-19 pandemic restrictions, according to an executive at the Bank of Thailand (BoT).
The loosening of the rules, which starts on Wednesday, will bring relief to businesses which had been constrained by the restrictions of recent months. However, the central bank will need to monitor the economic situation after the relaxation in order to assess the country's prospects, said Chayawadee Chai-Anant, the BoT's senior director for the economic and policy department.
With new daily infections falling, the government has eased some of the strictest containment measures in Bangkok and 28 other high-risk provinces, giving people more freedom to travel and allowing malls and restaurants to reopen, to help revive an economy which has been battered by the outbreak.
Ms Chayawadee said the BoT would monitor people's confidence regarding spending, travel and other economic activities after the containment measures were relaxed and stimulus measures to encourage domestic consumption were implemented. The central bank will also monitor new infections after the loosening.
"After an easing of the lockdown measures, the central bank will monitor the overall situation for around one month, and other factors assessing Thai economic growth for this year again," she said.
The central bank recently forecast Thailand's gross domestic product (GDP) growth rate for 2021 at 0.7%. During Aug 1-15 this year, domestic consumption remained weak while the country's overall economic activities were still heavily impacted by new infections and the government's tougher Covid-19 containment measures.
The BoT said that private consumption indicators contracted 8.1% year-on-year in July, and declined 5.3% on a month-on-month basis.
Domestic consumption in July declined from the previous month across all spending categories, due to the worsening pandemic situation and stricter containment measures. As a result, overall economic activities, household income, and consumer confidence deteriorated in spite of government measures which partially supported household purchasing power.
The value of merchandise exports in July slightly decreased by 0.3% from the previous month due to lower demand from trading partners as the pandemic situation abroad became more severe, with continuing global shortages of semiconductors which affected exports in electrical appliances, and outbreak clusters in Thai factories which affected agro-manufacturing exports. Nevertheless, exports in some categories continued to increase, such as agricultural products, electronic products, and steel.
Ms Chayawadee said the BoT would closely monitor Thai exports amid higher external risks, especially trading partners' new infections. While some countries have adjusted their 2021 GDP growth forecasts, the BoT has already priced in such external risk factors for Thailand's export growth assessment.