Central bank says the latest lockdown in Bangkok and adjacent provinces is likely to hit the economy harder than previous forecasts envisaged; Chamber of Commerce wants lending regulations relaxed
(AF) Business operators in Thailand have called for additional financial assistance from the government, including a debt moratorium, after the imposition of a further lockdown in Bangkok and surrounding provinces on Monday July 12.
The request, ahead of a meeting of the government’s economic team, which was expected to consider relief packages for businesses affected by the lockdown and overnight curfew, which will run for at least 14 days.
The Thai Chamber of Commerce asked the government to consider relaxing lending regulations so financial institutions can examine other factors aside from information from the National Credit Bureau, when people apply for a loan, the chamber’s chairman Sanan Angubolkul said.
The Bank of Thailand warned on Monday that the economy faces significant downside risks and could fail to meet baseline forecasts. The country is one of many in Southeast Asia struggling to cope with a surge of Covid infections, notably the Delta variant first identified in India.
The country’s third and biggest outbreak has seen a continuous rise in infections and deaths over the past two months, which spurred the Prayut Chan-ocha government to announce tougher containment measures in the capital and nine other provinces.
The restrictions would have a bigger-than-expected impact on the economy, Chayawadee Chai-Anant, a senior director at the Bank of Thailand (BOT), said at an analyst meeting.
“This policy may be more severe than expected and will likely affect economic activity more than forecast,” she said.
The prolonged outbreak and virus mutation could delay herd immunity and reopening plans and dent confidence, she said.
“It’s highly likely that the baseline (projections) will shift lower,” Chayawadee said.
Growth forecast cut
Last month, the BOT cut its 2021 GDP growth forecast to 1.8% from 3.0% and the 2022 outlook to 3.9% from 4.7%, due to anticipated lower numbers of foreign tourists.
The BOT has left its benchmark rate at a record low of 0.50% since mid-2020 after three cuts to ease the impact of the pandemic.
Monetary policy will remain accommodative and the central bank is ready to use policy tools as necessary to ease the impact of outbreak, the BoT said.
The BOT will closely monitor the outbreak and assess whether existing measures are sufficient, said Deputy Governor Mathee Supapongse. “A combination of financial, fiscal and public heath measures should be done appropriately,” he said.
In May, the king approved a further 500 billion baht ($15.4 billion) of borrowing to cope with the outbreak.
Thailand started its mass vaccination drive last month but has had limited vaccine supply. So far, 3.27 million out of Thailand’s more than 66 million people are fully vaccinated.
With reporting by Reuters.
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