BoT raises hopes of economic recovery
Central bank expects next week’s reopening to boost confidence and consumption
The atmosphere inside the Srinagarindra train night market which reopened after being closed due to the Covid-19 pandemic.
Bank of Thailand (BoT) expects next week’s reopening to further boost public confidence, following improved domestic consumption following easing of Covid-19 restrictions .
In a baseline scenario, the country’s reopening from November 1 should boost consumer and business confidence and continue to encourage domestic consumption. New Covid-19 infections are expected to increase, but severe cases will not increase significantly due to widespread immunizations, said BoT senior director for the economic and political department Chayawadee Chai-Anant.
After the government eased restrictions on September 1, economic activities improved over the next two months. However, the central bank will closely monitor the economic situation after the country reopens, Chayawadee added.
“In the event that economic activities continue to improve after the country’s reopening, the central bank would encourage economic stimulus measures, including through the BoT’s soft loan program,” she said.
The BoT reported on Friday that in September the economy had started to recover from the previous month thanks to the easing of Covid-19 measures. As a result, private consumption and private investment indicators improved.
Ms Chayawadee said private consumption indicators in September, after seasonal adjustments, rose 3.9% on a monthly basis, down from a contraction of 2.1% the month before.
The increase in private consumption in September was supported by almost all spending categories due to the gradual easing of containment measures and an ongoing vaccination campaign, which has helped boost overall economic activity. , household income and consumer confidence. In addition, pent-up demand and government stimulus measures also continued to support household purchasing power.
Private investment indicators in September, after adjusting for seasonal variations, rose 1.5% month-on-month, after contracting 2.3% in August. The increase was supported by an investment in machinery and equipment in line with improving demand and the business climate. At the same time, investments in construction continued to increase after the relaxation of containment measures on construction sites at the end of July 2021.
In addition, the sentiment of the country’s labor market has improved in line with economic activities, and the self-employed in particular have shown positive sentiment after the easing of containment measures. Labor movements to people’s hometowns also declined, and workers in the manufacturing sector returned to work. However, the Thai labor market is still fragile with large numbers of unemployed and underemployed people.
Ms Chayawadee said the number of foreign tourist arrivals in September, after seasonal adjustments, was 12,237, down from 15,105 the previous month, and remained low as the pandemic situation in Thailand and the United States. foreigner remains uncertain. In addition, restrictions on international travel to many countries remained in place.
Public spending continued to play a role in supporting the economy. These expenses in September continued to increase from the same month last year, from employee compensation to purchases of goods and services. However, investment spending contracted due to the high base effect, which resulted from accelerated central government disbursement last year.
The BoT’s survey of business operators in the service sector, including hotels, restaurants and transportation, from October 1 to 20, found that business activities were improving in line with the easing of containment measures .
Sales of consumer goods in department stores also increased, while sales of durable goods remained weak in line with the low purchasing power of people.