Virus, fragile labour market threaten economy in 2021: BoT
The global Covid-19 pandemic, combined with a fragile labour market, pose as pertaining risks for the economic recovery in 2021, says the Bank of Thailand.
The biggest risks are the recent virus upsurge, stricter lockdown measures overseas and continued weakness in the domestic labour market, said Chayawadee Chai-Anant, senior director of the economic and policy department.
The scale of domestic infections and the effectiveness of the government's measures to mitigate virus contagion will have to be assessed before the impact on Thailand's economic recovery can be fully seen, said Ms Chayawadee.
Despite a new round of domestic Covid-19 outbreak, a double-dip recession is not expected to transpire in the final quarter as the Thai economy has seen a recovery for the most part, she said.
A double-dip recession is when a recession is followed by a short-lived recovery and another recession.
However, she acknowledged that a more widespread Covid-19 could dent economic activities in early 2021, especially for private consumption and the services sector.
Although some labour market indicators improved last month, fragility remained high as did the unemployment rate, said Ms Chayawadee.
"The labour market is an important driver of Thailand's economic recovery and our labour market has considerable elasticity," said Ms Chayawadee.
The unemployment rate was at 2% last month, down from 2.1% in October, and 783,760 people were out of work, slightly less than the previous month's tally of 810,190.
She said more details on economic conditions in the final quarter of 2020 and the first quarter of 2021 will be unveiled in the Monetary Policy Report released on Jan 6.
Amonthep Chawla, head of research at CIMB Thai Bank, said a higher rate of domestic Covid-19 infections will affect consumer confidence, resulting in lower income for business operators in the food and services industries.
Although the unemployment rate might not edge up considerably from lower income of businesses, this could cause working hours to be reduced, thus weakening private consumption and potentially depress Thailand's economic growth throughout 2021, said Mr Amonthep.
In November, the Thai economy continued to recover but tourism continued to experience a severe contraction due to travel restrictions on foreign arrivals imposed as a result of the pandemic.