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Third Covid wave rocks Thai economy

(ATF) Thailand’s financial system has been hit hard by the latest coronavirus outbreak and the central bank says its economy is now more vulnerable.

Thailand and many of its neighbours are struggling with the spread of Covid-19 cases while they await the beginning of mass vaccination programmes to counter the pandemic.

Only about 1.5 million people are said to have received vaccines so far and they were mostly front-line health workers or vulnerable groups. But local production of the Astra Zeneca vaccine is due to next month.

The Southeast Asian country’s latest Covid outbreak – centred on Bangkok – is its biggest so far and has seen infections more than triple and deaths increase sixfold since April, following a year of success in containing earlier outbreaks.

The government led by former Army chief Prayut Chan-ocha had done a fair job but stopping the steady flow of migrant workers who sneak through its long porous borders was always going to be a tough task.

The Bank of Thailand says significant risks to the economy remain, according to the central bank’s minutes of its last meeting.

On May 5, the monetary policy committee left the policy rate unchanged at a record low of 0.50% for an eighth straight meeting to help support Southeast Asia’s second-largest economy amid a third wave of Covid infections.

The rate hold was to preserve limited policy room to be used at the most effective time, the minutes said.  

The Thai economy would expand at a much lower rate due to more severe impact of the latest outbreak relative to the second wave, the minutes said.

The central bank’s current 2021 economic growth forecast is 3.0% and it will review that at its next meeting on June 23.

“The third wave of outbreak resulted in slower and more uneven economic recovery across sectors,” the minutes said.

“The financial positions of Thai households had become more fragile as reflected in the elevated debt-to-income ratio, which was relatively high compared with other countries,” the minutes said.

The committee would continue to monitor developments in foreign exchange markets and capital flows, the minutes said.

An acceleration of vaccine procurement and distribution would be key to Thailand’s economic recovery, and the government should implement targeted and timely measures to accelerate the recovery, the minutes said.

On Tuesday, the cabinet approved a further borrowing of 700 billion baht ($22.3 billion) to ease the outbreak impact as its current 1 trillion baht borrowing is almost used up. 

With reporting by Reuters


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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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