Economic recovery to be slow amid Covid crisis, global energy prices, rise in product costs: BOT
Thailand’s economy is expected to recover gradually but still faces difficulties due to the Covid-19 crisis, global energy prices and the increasing cost of products and services, the Bank of Thailand (BOT) reported on Wednesday.
It said recovery in each economic sector is different, and it would take time to recover to pre-Covid levels.
“The Covid-19 situation is still worrisome even though the Omicron variant is expected to cause less impact on the public health system,” BOT said.
“Hence, it is necessary to gain vaccine efficiency, monitor the overall virus spread and continue with measures to contain the spread of the virus both domestically and overseas as it would affect tourism recovery.”
BOT went on to say that private sector consumption is likely to recover despite the Omicron outbreak and a decline in government Covid-19 relief measures.
“However, it is necessary to follow the recovery in each economic sector and the impact of high living costs on household debt and income, which has not fully recovered, as this would affect private sector consumption,” BOT said.
It expected inflation to be higher than the target, at 3 per cent in the first half of this year, as energy and fresh food prices have risen.
BOT pointed out that energy prices would remain at a high level in the long term due to geopolitical factors, adding that the government oil fund will help relieve the impact of rising energy prices “a little bit”.
“We did not expect inflation to increase continuously as demand was still low in line with recovering incomes and purchasing power, causing limited cost ‘transmission’,” BOT said.
“However, it is necessary to closely monitor global energy prices as it would cause the price of products and services to increase and put pressure on labour incomes.”
BOT also said low-income households were affected by rising food prices rather than fuel prices, while high-income households were affected by rising fuel prices rather than food prices.
“In addition, high living costs have caused a severe impact on the self-employed and employees in the service sector as their incomes are recovering slowly,” BOT acknowledged.
It said labour income is likely to recover slowly in the next one to two years due to slow tourism recovery, employers’ move to limit employment amid the Covid-19 crisis and the departure or relocation of labourers.
“These factors would affect recovery of the economy and the labour market,” BOT added.
It advised the government to promote measures related to debt restructuring to maintain financial stability.
