Economic inequality is expected to widen after the outbreak is controlled because lower-income earners will likely continue to suffer from the impact of the pandemic during an uneven recovery, says Bank of Thailand governor Sethaput Suthiwartnarueput.
Thailand grappled with economic inequality and social injustice before the pandemic, which only aggravated such problems, he said.
Fragile segments such as lower-income households and small and medium-sized enterprises (SMEs) are going to continue to suffer from inequality because a projected K-shaped recovery would be unequal, Mr Sethaput said at the BoT Symposium 2021 yesterday.
Covid-19 also appears to have a more negative impact on these segments with less resources, according to early public health data, he said.
These vulnerable segments have a lower ability to recover, which could increase social tension in the future.
A significant jolt to the economy such as a pandemic affects these fragile segments greatly, especially if income is reduced.
The impact can create an economic scar and delay a recovery. The result can mean lower assets for households and businesses, reduced skilled labour, and higher debt or debt overhang, said Mr Sethaput.
These scenarios reduce the capability of households and businesses to spend and make investments, causing an economic recovery to take more time, he said.
Mr Sethaput said Thailand has limited ability to withstand economic shocks in the new economic landscape amid higher uncertainties.
As a result, Thailand needs proper risk management, economic reform, industrial restructuring, the creation of a safety net, and a reduction in economic scar in preparation for any crisis, he said.
The central bank reported yesterday the Thai economy in August continued to be affected by the global outbreak, said senior director for the economic and policy department Chayawadee Chai-Anant.
Private consumption indicators declined despite supportive measures from the government because of weak household purchasing power and strict containment measures.
In August, the private consumption index fell 2.6%, compared with a 4.4% contraction the previous month.
Merchandise exports decreased in several categories as demand from trading partners softened after the outbreak situation abroad deteriorated, said Ms Chayawadee.
In August, exports shrank 3.5% month-on-month compared with a contraction of 0.9% in July.
Meanwhile, foreign tourist figures declined as a result of the severe outbreak.
Foreign tourist arrivals tallied 15,105 in August, declining from 18,056 in July.
The current account also posted a larger deficit in August compared with the previous month, mainly attributed to the trade balance as merchandise exports softened, she said.
Ms Chayawadee said economic activities started to pick up from late August, mainly supported by progress in the vaccination scheme.