BoT raises economic revival hopes
The central bank expects next week's reopening to boost confidence and consumption
The Bank of Thailand (BoT) expects next week's reopening to further raise public confidence, coming on the back of an improvement in domestic consumption following a relaxation of Covid-19 restrictions.
Under a baseline scenario, the country's reopening from Nov 1 should support the confidence of people and businesses and continue to encourage domestic consumption. New Covid-19 infections are expected to increase, but severe cases will not rise significantly because of widespread vaccinations, said the BoT's senior director for the economic and policy department Chayawadee Chai-Anant.
After the government eased restrictions on Sept 1, economic activities improved in the following two months. However, the central bank would closely monitor the economic situation after the country reopened, Ms Chayawadee added.
"In the case of economic activities continuing to improve after the country's reopening, the central bank would encourage economic recovery measures, especially through the BoT's soft loan scheme," she said.
The BoT on Friday reported that in September the economy began to edge up from the previous month thanks to the relaxation of the Covid-19 measures. As a result, private consumption and private investment indicators improved.
Ms Chayawadee said private consumption indicators in September, after seasonal adjustments, grew 3.9% on a month-on-month basis, from a contraction of 2.1% the previous month.
Increasing private consumption in September was supported by almost all spending categories due to the gradual relaxation of the containment measures and an ongoing vaccination campaign, which helped boost overall economic activities, household income and consumer confidence. In addition, pent-up demand and the government's stimulus measures also continued to support household purchasing power.
Private investment indicators in September, after seasonal adjustments, grew 1.5% on a month-on-month basis, from a contraction of 2.3% in August. The increase was supported by an investment in machinery and equipment in line with improved demand and business sentiment. Meanwhile, investment in construction continued to increase after the relaxation of containment measures on construction sites in late July 2021.
In addition, the country's labour market sentiment has been improving in line with economic activities, and self-employed workers in particular showed positive sentiment after the relaxation of the containment measures. Labour movements back to people's hometowns also declined, and workers in the manufacturing sector have been going back to work. However, the Thai labour market is still fragile with large numbers of unemployed and underemployed people.
Ms Chayawadee said the number of foreign tourist arrivals in September, after seasonal adjustments, was 12,237, a decline from 15,105 in the previous month, and has remained low as the pandemic situation both in Thailand and overseas remains uncertain. Also, international travel restrictions in many countries have remained in place.
Public spending has continued to play a role in supporting the economy. Such expenditure in September continued to expand compared to the same month last year, from employee compensation to purchases of goods and services. However, capital expenditure contracted due to the high base effect, which resulted from expedited disbursement by the central government last year.
The BoT's survey of business operators in the service sector including hotels, restaurants, and transportation from Oct 1-20 found that business activities have been improving in accordance with the relaxation of containment measures.
Sales of consumer goods in department stores have also been rising, while sales of durable goods remained weak in line with people's sluggish purchasing power.