By Orathai Sriring

BANGKOK (Reuters) – Thailand has good fiscal and financial stability but its economy remains fragile and has limited capacity to withstand shocks due to high external dependence amid a severe COVID-19 outbreak, the country’s central bank said on Thursday.

This country in Southeast Asia is currently dealing with its most severe coronavirus epidemic to date. The vital tourism industry continues to struggle. According to the central bank, growth is only 0.7%. The economy saw a 6.1% drop in its last year.

The stability of Thailand’s financial institutions, its fiscal sustainability and the strength of the balance of payments all look “quite good” according to Sethaput Suthiwartnarueput (Bank of Thailand Governor), at a symposium held on Thursday.

Although macro-economic indicators show that the Thai economy has stability, he stated, “the Thai economic system is not resilient or is very fragile.” He also said that to increase stability other than only economic issues, such social and environmental aspects would be necessary.

Sethaput stated that Thailand needs to have the resilience to weather shocks, and be able to rebound from them.

He stated that “but currently, we have limitations on every aspect of the Thai economy which make it not resilient to difficulties.”

The economic structure is heavily dependent on foreign countries, including for tourism, exports and technology as well as a growing reliance on foreign workers https://www.reuters.com/article/idUSL4N2OV0R3 due to the ageing society, he said.

Sethaput stated that the economy is unable to adapt to changes because of high levels of inequality and large informal sectors.

Sethaput said vulnerable businesses and households are frequently affected by dramatic changes. He emphasized that income losses can create “scars” in the economy which could take years to heal and impede economic recovery.