A rising under-employment rate driven by the coronavirus crisis will further aggravate Thailand’s swelling household debt and borrowers’ debt-servicing struggles, local media reported on Friday. 

Bank of Thailand’s Governor Sethaput Suthiwartnarueput said although the COVID-19 outbreak has not significantly impacted the unemployment rate due to workers moving from the service sector to the farm sector in their hometowns, the pandemic has induced a rise in under-employment because of a decline in working hours, according to Bangkok Post.

“The scenario has led to lower household income and reduced debt repayment ability among consumers,” the daily quoted Sethaput as saying.

The ratio of household debt to GDP rose to 84% in the second quarter, an 18-year high, up from 80.3% of GDP in the first quarter, according to the country’s Central Bank data.

Meanwhile, Kasikorn Research Center said the ratio could rise to 88-90% at the year-end as a result of the economic slowdown, the report added.

“Given households’ weaker debt-servicing ability, this could further increase the household debt ratio,” said Sethaput.

He said the higher under-employment rate will particularly come from the tourism sector, which has been suffering a heavy impact from the pandemic.

Although exports are another sector affected by the pandemic, the report said this segment has endured a lesser impact than the tourism industry because 50% of the country’s shipments come from the three core industries, namely automotive, electronics, and petrochemicals.

Bank of Thailand said that as the economic recovery is poised to remain uneven, it will take at least two years for the economy to return to the pre-pandemic growth trajectory.

“Under this scenario, the labor market and employment conditions will need more time to return to normalcy,” said Sethaput.

The Central Bank reportedly predicted the economy to contract by 7.8% this year, with the figure expected to improve to 3.6% next year.

Bank of Thailand forecasted Thailand’s economy to begin showing a positive growth rate in the second quarter of 2021 and return to a normal growth trajectory in the third quarter of 2022.

Meanwhile, Thailand reported two new cases on Friday, raising the total to 3,643, according to health authorities.

A total of 3,457 patients have recovered including three additions over the past 24 hours, while the death toll remained unchanged at 59.

* Writing by Rhany Chairunissa Rufinaldo from Anadolu Agency’s Indonesian language services in Jakarta.

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