Sethaput Suthiwartnarueput: From resiliency to recovery and beyond - central bank policies for an uncertain world

Edited script by Dr Sethaput Suthiwartnarueput, Governor of the Bank of Thailand, from Thailand Focus 2021, The Stock Exchange of Thailand (SET), Bangkok, 25 August 2021.

Central bank speech  | 
09 September 2021
PDF full text
 |  9 pages

Distinguished participants,

It is a great pleasure and a privilege for me to be here to address the 15th Thailand Focus and let me thank the Stock Exchange of Thailand for inviting me to give my remarks today. I would like to cover three areas. First, I will share my thoughts about the economic outlook for Thailand. Secondly, I will talk about what the Bank of Thailand has been doing in response to this crisis. And thirdly, I would like to share with you about what we are likely to do going forward.

Part 1: The Economic Outlook for Thailand

First, on the economic outlook, Thailand has been hit very hard by the COVID-19 crisis and harder than our neighboring countries. As a result, our economic recovery is likely to be slow and lag that of the region. These are due to the following reasons. First, Thailand relies heavily on tourism. Tourism accounts approximately 11 to 12 percent of GDP, which is two to three times higher than that of neighboring countries. Thus, tourism that is likely to recover much slower than other sectors will be a drag to the speed of the economic recovery. The second reason is that our vaccine rollout has admittedly been slower than that of the region. The share of the population that have received two doses of vaccines in Thailand currently stands at about seven percent, which lags behind other countries in the region including Malaysia, Indonesia, and the Philippines. Therefore, given that Thailand has been hit severely by the third wave of the outbreak with subsequent lockdown and the likelihood in achieving a larger share of vaccinated population that will take some time, this indicates that the recovery is likely to be slow going forward.

Second, Thailand's economic recovery is likely to be highly uneven or so-called "K-shaped recovery". Our export sectors have recovered back to where they were prior to the crisis and are producing and exporting at levels higher than the pre-crisis levels. However, other sectors, notably the services and tourism-related sectors, have been recovering more slowly. In particular, hotels and restaurants are lagging significantly and experience a great degree of hardship. The reason why this has hit the economy particularly hard is that tourism, aside from accounting a large share of GDP, also accounts an even larger share of employment. Tourism, both directly and indirectly, accounts around 20 percent of total employment in Thailand. Hence, employment and income were severely hit as a result of COVID-19, which will be another factor that will characterize both the slower and the uneven nature of the recovery going forward.