Economy improving but recovery is slow

(Reuters) – The Thai economy continued to improve in December but recovery remained patchy with a second wave of coronavirus infections also starting to impact some economic activity, the central bank said yesterday.

Exports, a key growth driver, and private investment improved, but the coronavirus outbreak that emerged late last month hurt domestic travel while the number of foreign visitors remained minimal due to restrictions, the Bank of Thailand said.

While the outbreak has been fast and widespread, its impact on economic activity has been less severe than the first wave last year as new restrictions were more limited, BoT director Pornpen Sodsrichai told a briefing.

Tourism-related sectors have been harder hit, but the manufacturing industry was still receiving orders, particularly from overseas, she said.

“The overall economy is recovering but gradually and it is uneven. It will take a while,” Ms Pornpen said.

In December, exports, a key driver of growth, rose 4.6% from a year earlier, while imports dipped 0.1%, resulting in a trade surplus of US$2.8 billion in the month.

Thailand recorded a smaller current account deficit of $693 million in December after a deficit of $1.48 billion in the previous month, helped by increased exports, the BoT said. In the fourth quarter of 2020, overall economic activity also recovered continually, though unevenly, it said.

Before the new outbreak, the BoT expected Southeast Asia’s second-largest economy to have contracted 6.6% in 2020 and to grow 3.2% this year.

It will take into account factors such as the easing of restrictions, government measures, foreign tourist numbers and global trade before adjusting its forecasts, Ms Pornpen said.

On Thursday, the Finance Ministry cut its 2021 economic growth outlook to 2.8% from 4.5% due to the  slump in tourism.

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