“Sometimes we wear the hat of an analyst that concentrates so much on the technical aspects of our forecasts and calculations. If we realise it is a technical recession, it is only a technical calculation,” central bank governor Veerathai Santiprabhob told the Bangkok Post in an exclusive interview.
“We should emphasise more how best to help mitigate the impact of the outbreak on the Thai economy or Thai society.”
A technical recession is defined as two straight periods of quarterly contraction.
The employment market is facing a host of risks this year, with widespread drought, poor exports, the previous delay of the 2020 fiscal budget and the coronavirus outbreak weighing on jobs, warned the National Economic and Social Development Council (NESDC).
The NESDC reported 37.5 million people were employed in the fourth quarter of 2019, down 1.1% year-on-year. This marks the third consecutive quarter of decreases.
“It is unavoidable that certain segments of society will be significantly hit by the outbreak, particularly those in the tourism sector or small and medium-sized enterprises that have been affected by not only the outbreak, but also a series of adverse incidents since last year: trade tensions, the drought and the [previous] delay of the [fiscal 2020] budget,” said Mr Veerathai.
The tourism sector, which accounts for more than 10% of GDP and has been the growth engine in recent years, is bearing the brunt of the viral outbreak.
After a 2.5% rise in tourist arrivals in January, February’s figures likely slumped 40%, and a deeper decline is expected in March and April, Tourism Authority of Thailand Governor Yuthasak Supasorn told Reuters.
“To what extent we can mitigate the impact depends on the collaboration of various agencies. At this point, I think we all should realise that there is no one solution. It is a coordinated effort [and] an urgent effort from all parties to help those that have been impacted,” said Mr Veerathai.
At its first meeting in February, the central bank’s Monetary Policy Committee unanimously voted to lower the policy interest rate by 25 basis points to a historic low of 1%, seen as a preemptive move to shore up economic growth battered by the COVID-19 epidemic.
The Bank of Thailand has asked banks and non-bank financial institutions under its supervision to temporarily lower the minimum amount due on credit cards to below 10% of the outstanding balance and loosen the ceiling for personal loan credit lines in case of emergency for new coronavirus-hit debtors.
The Finance and the Tourism and Sports ministries were expected to unveil measures for Cabinet approval today (Mar 3) to stimulate tourism and aid those affected by COVID-19, but the announcement could be deferred to next week.
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