Titans of industry up growth outlook

Titans of industry up growth outlook

Declining infections raise confidence

The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) believes new daily infections peaked in August and upgraded its economic growth projection for the country as a result.

New daily infections have been steadily declining since late last month, said Payong Srivanich, chairman of the Thai Bankers' Association and chair of the meeting yesterday. The government has shown progress on vaccine procurement and vaccination nationwide, he said.

With the improved outlook, the committee upgraded the country's GDP growth projection for this year from a range of -1.5% to zero to a range of -0.5% to 1% growth.

The committee also adjusted its export growth projection this year to a range of 12-14% from the previous forecast of 10-12%, supported by global economic recovery and improving external demand.

"The JSCCIB agrees with the government on easing lockdown measures starting from yesterday. We think the government should avoid such measures again because they had a heavy impact on the country's economy," Mr Payong said.

If infections spike again, the government should use bubble and seal measures and provide proactive testing services utilising antigen test kits rather than using lockdown measures, said the JSCCIB.

The government's partial easing of lockdown measures should help support economic activities and improve Thailand's economy the remainder of the year, he said.

If the government uses bubble and seal measures for the manufacturing sector, this should not affect the supply chain, said Mr Payong.

If the government can contain new daily infections, it should allow the implementation of measures to spur consumption the rest of the year, especially for tourism in the final quarter, said the committee.

"If more vaccines are procured and vaccination schemes become more efficient, the government can set a more ambitious GDP growth rate for 2022. The existing GDP assessment of 3-5% by the authorities for next year is too low," he said.

The outlook of 3-5% GDP growth for 2022 is lower than the level in 2019 before the pandemic. If growth faces obstacles next year, fiscal policy should play a key role in contributing to expansion, said Mr Payong.

"The JSCCIB believes the government should set a 2022 growth forecast of 6-8%. This rate is possible if the level of fully vaccinated Thais exceeds 50%, which would allow the government to increase the public debt ceiling to 70-80% of GDP," he said.

Under this scenario, the government could inject liquidity into the economy of 700 billion baht to 1.5 trillion baht, as well as offer co-payment and credit guarantee schemes that serve as economic multipliers. If new infections rise after measures ease, the economy could face higher risks and go into recession, said the committee.

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