Lockdown to hurt domestic tourism, private consumption
The government’s lockdown order and tighter controls will mostly affect private consumption and domestic tourism, says Amonthep Chawla, head of research at CIMB Thai Bank (CIMBT).
Private consumption is expected to continue slowing in July and in the third quarter on a quarter-on-quarter basis.
As people are expected to cease cross-provincial travel, this will affect local tourism throughout the third quarter, he said.
However, fiscal policy is still needed to help vulnerable people under the lockdown measures, said Mr Amonthep.
The central bank needs to speed up supporting liquidity for small and medium-sized enterprises through the amended soft loan scheme, while a monetary policy rate cut is also needed, he said.
“The central bank’s Monetary Policy Committee should hold an emergency meeting to consider cutting the policy rate, which would help to ease the financial burden of borrowers,” said Mr Amonthep.
However, the government’s latest measures should not affect the manufacturing sector and Thai exports during the global economic recovery, said CIMBT.
Even as exports increase, the Thai economy faces a downside risk from higher daily infections and a delayed vaccination rollout, he said.
Mr Amonthep said if the government cannot contain new infections and prolongs the lockdown period, CIMBT will slash the country’s economic growth projection for this year again, and it could be lower than 1% from the existing estimate of 1.3%.