Mr. Sethaput Suthiwartnarueput, Governor of the Bank of Thailand (BOT) revealed in his first meeting with the press, that the public health crisis brought about by COVID-19 has severely impacted global economic activities, including Thailand. The lockdown in Thailand has significantly affected SMEs and households. Foreign tourist arrival is expected at only 6.7 million person in 2020, from around 40 million person last year, accounting for the loss in tourism revenue of 10 percent of GDP. Meanwhile, second quarter export hit the largest contraction in 11 years. The analogy can be drawn to that of a patient in intensive care unit.
Following the easing of the lockdown, or when the patient has been discharged from ICU, the challenges facing the Thai economy has changed in at least in 3 dimension 1) the recovery of economic activities has been "Uneven" in terms of economic sector, geography, and business size, 2) economic recovery will take at least two years "Long" to reach pre-COVID-19 level, partly because the Thai export and markets are concentrated in the slow recovery sectors, and 3) "Uncertainties" about the timing and success of the vaccine trial and the recovery of tourism. These lead to the question: Can recovery be sustainable and durable?
As Thailand's contexts have changed, the BOT assessed that the approach to resolving this crisis would need to move from blanket measures that were quickly rolled out to tackle the problems, to measures that are more targeted, comprehensive, and flexible with consideration to possible side effects. Due to limited resources, the authorities must allocate resources appropriately to fully assist those who are in need. One example that the BOT has already implemented is the adjustment in the debt moratorium policy launched during lockdown when businesses closed down, and employees worked from home or workers and firms became cash strapped because of declining working hours, to promoting more targeted approach where financial institutions apply debt restructuring appropriately based on debtors' repayment abilities, analogous to the situation where the doctor choose the treatment for his patients according to their symptoms.
These economic problems can be solved, but it requires some time and efficient management to utilize limited resources. The BOT firmly believes that the Thai economy is strong enough to withstand this crisis due to the fact that we have been successful in containing the pandemic of COVID-19. Moreover, financial stability of the country is sound while external stability remains strong, with low and manageable level of public debt, and flexible labor market.
To this end, five big challenges for the BOT going forward are to 1) sustainably solve the debt crisis which will enable households and businesses to weather the COVID-19 crisis, 2) maintain financial stability to support economic recovery, 3) maintain macroeconomic stability to ensure that the Thai economic structure can withstand any volatility during the pandemic and beyond, 4) build public trust and make the BOT to be one of the most trusted public agencies and 5) improve the efficiency of the BOT's operation as an outcome-oriented organization and create the sustainability of the Thai economy and society.