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30 Jun 2021

Econ Digest

One month of partial lockdown in six provinces may cause a net loss of at least THB40 billion


The government has announced partial lockdown measures, including the prohibition of construction work, primarily at large construction projects for at least 30 days in the maximum and strict controlled zones (dark red) of six provinces, namely Bangkok, Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan and Samut Sakhon, plus sales of food and beverage at restaurants, with the exception of takeaways, effective June 28, 2021. Moreover, it has introduced relief measures that are preliminarily worth THB7.5 billion for both employers and employees.

KResearch views that assistance mechanisms are primarily intended for only the workforce and businesses in the downstream construction and restaurant businesses. Obviously, they are the first group to be affected by lockdown measures, but other groups in the related businesses or supply chains will be hurt too from the suspension of business activity. For the construction business, related operators may face legal issues related to the delay in handing over construction projects, which could potentially incur higher costs than having to suspend their work. KResearch views that if the COVID-19 situation subsides over the next one month, the impact might be only short term. But, if the situation is prolonged or the number of daily infections does not decline as fast as expected, the likelihood that businesses will incur additional losses and more people will be affected will be high.  

Preliminarily, KResearch assesses that the net loss to the construction and restaurant businesses in the six dark red zone provinces within one month of the partial lockdown may amount to roughly THB40 billion, or equivalent to 0.25% of GDP. It is believed that the authorities will continue to monitor and assess the situation in order to consider issuing additional measures if it deems this necessary. One of the relief measures will likely include liquidity enhancement for affected businesses in their entire supply chains.

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Econ Digest