Grim economic outlook in Thailand if an Omicron outbreak drags on for months
Thai economists have expressed concern that an outbreak of the COVID-19 Omicron variant, if it drags on for a long period, will severely impact Thailand’s economic growth.
Amornthep Jawala, assistant managing director of the research office of CMB Thai Bank, said yesterday that, although the office has not yet adjusted down Thailand’s GDP projection for next year, set at 3.8%, he admitted that there is a possibility that the Thai GDP will contract more than originally forecast, due to the impacts on the tourism sector and domestic consumption from an Omicron variant outbreak, although the impacts may not be as bad from lockdown restrictions.
He predicted that Thailand’s GDP may shrink to just 3% if an outbreak drags on for about six months, At this stage, however, he said he is optimistic that an outbreak will not last more than three months, after which the economy quickly recover.
With the government’s economic and fiscal policy management, Amornthep said he believes there is room for the economy to be stimulated by the injection of the balance from the 500 billion baht loan and the Central Fund.
Patcharapoj Nuntharamas, assistant manging director of Krung Thai Compass research centre, said the centre projects Thailand’s growth rate next year at 3.8%, but that may drop by 1% if an Omicron outbreak lasts more than three months and the situation is serious, adding that this will force the government to roll out 90 billion baht in stimulus packages to boost the economy.
Pipat Luengnaruemitchai, chief economist at Kiatnakin Phatra Securities (KKP), admitted that the Omicron variant represents a downside risk to the forecast and an outbreak will slightly impact on the Thai economy.
In a worst case scenario, however, in case the variant spreads widely to the point that people are unwilling to spend and the tourism business is at a standstill, he predicted that Thailand’s growth rate may fall to under 2%.
Somprawin Manprasert, chief of economic researcher of Bank of Ayudhya (BAY), said the research centre believes that Thailand’s economic growth will remain at 3.7%, as the Omicron variant will not have much impact because the real sector is still performing well, including exports, and there are no lockdown restrictions.