The Bank of Thailand is raising huge concerned over business closures and layoffs attributed to the prolonged Covid-19 restrictions, which are adding significant downside risks an already battered economy.
The Bank of Thailand on Wednesday released the edited minutes of the Monetary Policy Committee (MPC) meeting, which revealed the financial position of businesses, especially those in the service sector. The meeting revealed businesses have become more vulnerable, which will lead to widespread business closures and layoffs.
The labour market is becoming extremely fragile, particularly the service sector and the self-employed, as both have experienced massive income losses and closures. This has also led to massive household debit in Thailand
Sethaput Suthiwartnarueput, the Bank of Thailand governor on Monday said employment has been declining, both in terms of higher unemployment and fewer working hours per day.
The combination of unemployed workers and employees working fewer hours reached 3 million in the second quarter this year, up from 1 million before the pandemic.
Thailand’s graduates jobless
Because of the pandemic and government restrictions roughly 1.6 million unemployed people have returned to their hometowns, he said. Most have shifted from the service sector to agriculture, earning a lower income.
The number of unemployed workers who have been out of work for more than one year rose to 170,000 in the second quarter this year, an increase of three times from the level before the outbreak.
The number of college graduates without jobs rose to 290,000, increasing by almost 90,000 from before the pandemic, he said.
The Bank of Thailand believes significant downside risks remain for the economy, given the outbreak in Thailand and other countries could become more severe.
Virus mutations could reduce vaccine efficacy, while slow vaccination progress could cause a more prolonged and severe public health crisis.
In this scenario, the economy would expand at a much slower rate due to stricter Covid-19 containment measures, which would impinge on economic activities and domestic demand.
The MPC recently assessed the economy was projected to expand by 0.7% and 3.7% in 2021 and 2022, respectively.
This is significantly lower than its June projection because private consumption slumped this year and foreign tourist figures are projected to be significantly lower next year, said the MPC.
The Thai economy this year is supported by merchandise exports in line with the global economic recovery led by developed economies, as well as public spending, according to the committee.
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