Omicron hits GDP 0.06% – 0.12% if it doesn’t stretch and doesn’t close the city.
On 24 January 2022 at 10:30 p.m.
KKP expects the impact of Omicron will affect GDP 0.06% – 0.12% if it is not protracted and the city is not shut down.
KKP Research by Kiatnakin Phatra released a report, “Keeping an Eye on Thai Economic Risks 2022: How Much Omicron Impacts the Thai Economy?” revealing that the impact of Omicron on the Thai economy is less compared to previous outbreaks. important is
1) Strong outbreak tendency but likely to end sooner and there is a reduced chance of closing the city International data shows that the proportion of hospitalizations caused by the Omicron strain of coronavirus is lower. This is partly due to the large increase in vaccination rates for COVID-19 compared to previous outbreaks. KKP Research estimates that for Thailand, the current COVID-19 outbreak will be severe and widespread. But it should end sooner than the previous round, taking about 1-2 months.
2) The government sector understood the cost and constraints of the measures and began to change its direction from “Preventing Covid-19” has become more “living with covid”. Lately, it is clear that many countries have begun to implement policies to accelerate vaccination and not introduce severe lockdown measures to reduce the impact on the economy. This is a policy of Thailand in the past as well.
3) People are tired of a long lockdown (Lockdown Fatigue) by getting vaccinated, causing people to have less anxiety. and began to return to a more normal life
impact on the economy
1) In the base case of the Omicron outbreak, even if the economy was disrupted by consumer caution. and restrictions from the government that may be more But it will not lead to a severe lockdown like the previous outbreak. If consumption and investment fell simultaneously by 1%-2% in 1 month (2% – 5% compared to the previous period), this would affect the full-year GDP of about 0.06% – 0.12% only, which is considered in the low level
2) Outbreaks that are likely to end soon as in South Africa may slow the recovery of tourism but should speed up when the situation returns to normal and does not affect the projection for the whole year not much Around 5.8 million foreign tourists are expected to return in 2022 in the second half of the year. And the outcome of the Test&Go suspension will not have a significant impact on the forecast of full-year tourist numbers. If the situation returns to normal quickly, which at present, Prof. has resolved to return to accept tourists through the Test & Go project again in February.
Overall, KKP Research estimates that the Thai economy in 2022 will grow at 3.9%, which is not very high compared to a contraction of 6.1% in 2020 and in 2021 that is expected to recover only 0.9%. Consumption and tourism are the two major drivers of the Thai economy. But the Thai economy remained below pre-Covid crisis levels throughout the year. And also need to monitor the risk if the epidemic situation is protracted or there is a new outbreak in the second half of the year.
Risks to watch
Although the risk from Omicron is low, more easily spreading outbreaks can put pressure on the health system in the short term. And government policies in the management of the health care system will have an important effect on the impact of the outbreak, for example, if there is a policy for people with low-risk infections to be hospitalized. This could lead to the health system reaching its limit earlier than expected and the number of elderly people unable to receive treatment. will seriously affect the Thai economy as follows:
1) Domestic consumption tends to slow down further. and will have an important effect on the economic recovery The sectors that will be hit hard will be accommodation and food, transportation and trade, which will affect cash flow and the downstream effect on employment is likely to be more severe.
2) If tourists are unable to return this year, GDP for 2022 is projected to grow at less than 2% year-on-year. Significantly lower than current forecasts
3) The pressure on the baht in the depreciation direction will be much more intense. This was due to the deficit of the current account coupled with the tighter monetary policy directions of the major economies.