Third wave of COVID infections spins new economic risks
Thailand’s new wave of COVID-19 infections has raised the economic risk level, but a clear picture of the impact will only emerge after the Songkran break.
The Thai economy contracted 6.1 per cent amid the first wave last year, and following the second wave in December and third wave just last week, many people are worried that Thailand’s recovery will be further delayed.
The government is also under fire because the transport minister and other senior officials were rumoured to be among the cluster-infection at Bangkok nightspots where the third wave first emerged.
Songkran spending dampened
The government has ordered the closure of entertainment venues in 41 provinces, including Bangkok, for two weeks from midnight Friday (April 9). Also cancelled are concerts and large social gatherings during the six-day Songkran break. These prohibitions are bound to affect entertainment businesses and public consumption in general.
Thanawat Phonvichai, president of University of the Thai Chamber of Commerce University, estimates the latest infection wave will cost the country between Bt60 billion and Bt100 billion – assuming the government can successfully contain the spread in a month or two.
Jiraphant Asvatanakul, vice chairman of the Thai Chamber of Commerce, agreed, saying: “The latest wave of infections will have an impact on the economy to some extent, but how large or small will depend on how fast the spread can be contained.”
However, he is optimistic about the economy as a whole. He said that though the tourism industry will take longer to recover, the impact of this latest wave may not be too severe because ongoing recovery of the global economy is boosting Thai exports.
Government spending will also help shore up the economy, he said.
“The government should extend relief packages and provide continuous support to businesses and the general public,” he said.
‘Speed up inoculation’
After implementing a nationwide lockdown for the initial COVID-19 outbreak last year, the government learnt lessons and chose less severe restrictions for the second wave that emerged in mid-December.
For the third wave that arrived last week, the government has likewise stopped short of blanket restrictions, instead adopting limited measures targeted at specific businesses and risky locations.
“We want the government to quickly respond to emerging new cases and adjust measures accordingly. The government should also lay down strategies in advance instead of taking action after the event,” Jiraphant said.
He added that the government should tap the private sector’s efficient logistics and cold-storage facilities to speed up the inoculation process.
Stanley Kang, chairman of the Joint Foreign Chambers of Commerce in Thailand, said that though he does not expect the government to impose severe restrictions, people should maintain strict preventive measures such as wearing face masks, cleaning hands and practising social distancing to avoid a fourth wave.
GDP projection dependent on infections
Meanwhile, Charl Kengchon, executive chairman of Kasikorn Research Centre, said more information is required before the centre can decide whether to revise downwards its economic growth projection for Thailand.
“Yes, economic risks have risen over the past few days following the latest wave,” he said, before adding that the scale of economic impact will depend largely on the infection rate after the Songkran holidays.
Many observers fear that the rate of infections will jump when millions travel from Bangkok and other cities back to their hometowns over the holiday.
“We may have more information in late April and then we can evaluate the magnitude of the impact,” Charl said.
For now, the research house is maintaining its projection of economic growth at 2.6 per cent this year.
If the number of new infections is limited and the government can contain the spread quickly, then the economic hit may not be very severe, he said. He added that the government will have about Bt200 billion left in its previous borrowing package to fund extended relief schemes.
In the worst-case scenario, infections would spread and the country would be hit by wave after wave of cases, said Charl.
The Bank of Thailand in March revised its economic growth projection for this year from 3.2 per cent to 3 per cent, though April’s fresh outbreak will add another drag factor to the economy.
By Thai PBS World’s Business Desk