(Bloomberg) — Thailand plans to allow more foreign workers into the country starting next month to fill a labor shortage that has hurt manufacturers and poses a risk to an economy that’s just starting to recover from the Covid-19 outbreak.
The government is allowing illegal workers now in Thailand to register by the end of the month to assess how many more people to allow in from neighboring countries, such as Myanmar, Cambodia and Laos. Labor Minister Suchart Chomklin said he expects about 100,000 will be counted, with the overall shortage estimated at about 300,000.
“We will start prosecuting illegal workers from next month because we can’t take any risks that will lead to any new outbreak,” Suchart said. Thailand had about 2.5 million foreign workers before the pandemic, with at least one-fifth having left the country since the start of the pandemic.
Prime Minister Prayuth Chan-Ocha has faced a dilemma between supporting the nascent economic recovery with migrant workers and containing the virus, with many foreign laborers infected because they lived in crowded camps and had limited access to vaccinations. The economy contracted 6.1% last year, the most in more than two decades. It’s forecast to expand by about 1.2% this year.
The Federation of Thai Industries said manufacturers need at least 500,000 foreign workers, with focus on the construction and food sectors. Thai Union Group Pcl, owner of Chicken of the Sea and John West seafood brands, reported a 5.8% year-on-year drop in its third-quarter profit, citing supply-chain disruption and limitations on its workforce during the outbreak.
The government plans to bring in more workers under memorandum of understandings with neighboring countries. Migrants will be required to quarantine for as many as 14 days and pass RT-PCR tests. The prime minister asked the Health Ministry to set aside 500,000 doses of vaccines for those workers, Suchart said.
“We have labor shortages because many Thai people avoid doing hard and heavy jobs, which are filled up by migrant workers,” said Thanavath Phonvichai, president of the University of Thai Chamber of Commerce. “It’s necessary to bring them in. If not, the production both in the farming and manufacturing sectors won’t meet targets and will hurt the economic recovery.”
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Bank of Canada keeps interest rates unchanged, warns of Omicron uncertainty
The Bank of Canada on Wednesday held its key overnight interest rate unchanged, as expected, and said inflation was broadening even as it warned that the Omicron coronavirus variant has created “renewed uncertainty.”
The central bank, in a regular rate decision, left its key overnight interest rate at 0.25% and maintained guidance that economic slack would be absorbed in the “middle quarters” of 2022, setting the stage for a first rate hike as soon as April.
But it dropped a reference to the pressures pushing up prices as being “temporary,” while noting employment had returned to pre-pandemic levels, with job vacancies high and wage growth picking up.
“Inflation is elevated and the impact of global supply constraints is feeding through to a broader range of goods prices,” the Bank of Canada said.
“The effects of these constraints on prices will likely take some time to work their way through, given existing supply backlogs.”
While Canada‘s economy had “considerable momentum” going into the fourth quarter, the central bank said that Omicron, along with “devastating floods” in British Columbia last month that cut off access to a key port, could hit economic activity.
“(This) could weigh on growth by compounding supply chain disruptions and reducing demand for some services,” it said.
The Canadian dollar was trading nearly unchanged at 1.2641 to the greenback, or 79.11 U.S. cents, after the decision, pulling back from its strongest level in nearly three weeks.
“Some in the market were looking for a signal of an imminent rate hike and that’s conspicuously absent. As a result, the Canadian dollar dipped on the decision,” said Adam Button, chief currency analyst at Forexlive.
Economists said the Canadian central bank was likely buying time until its January meeting, when it will update its economic forecasts, to get a clearer view of how Omicron and the B.C. flooding will impact economic activity.
“For now, I think it’s a waiting game until the January forecasts as we assess more information on Omicron,” said Derek Holt, vice president of capital market economics at Scotiabank.
Canada‘s headline inflation has been above the central bank’s 1%-to-3% control range for seven months, as global supply chain bottlenecks and high energy prices fueled price acceleration.
The Bank of Canada reiterated that it expects inflation to remain elevated in the first half of 2022, returning to its 2% target in the second half of the year.
Money market rates eased between 8 and 10 basis points after the policy decision, with the market expecting the first hike in March or April, and five increases in total next year. [BOCWATCH]
(Additional reporting by Steve Sceherer in Ottawa and Fergal Smith in Toronto; Editing by Jonathan Oatis and Paul Simao)
Canadian dollar steadies near 3-week high ahead of BoC decision
The Canadian dollar was little changed against the greenback on Wednesday, holding near its strongest level in almost three weeks as fears eased about the economic impact of the Omicron variant and ahead of a Bank of Canada interest rate decision.
The loonie was trading nearly unchanged at 1.2641 to the greenback, or 79.11 U.S. cents, after touching its strongest intraday level since Nov. 19 at 1.2616.
“The CAD has benefited from the unwind in the Omicron premium so far,” Bipan Rai, North America head, FX Strategy at CIBC Capital Markets, said in a note.
A rebound in market sentiment continued, with world shares set for their biggest two-day jump since November last year as investors became less concerned about the variant and the price of oil rose 0.3% to $72.27 a barrel.
Oil is one of Canada‘s major exports.
The Bank of Canada interest rate announcement is due at 10 a.m. (1500 GMT). Money markets expect rate hikes to begin in January or March, which is an earlier time frame than the central bank has been guiding.
Without the new variant, the strength of recent inflation, employment and GDP data “would be enough to signal a hike at next month’s meeting,” Rai said.
Canadian government bond yields edged higher across a flatter curve. The 10-year rate touched its highest level since Dec. 1 at 1.593% before dipping to 1.583%, up less than half a basis point on the day.
(Reporting by Fergal Smith; Editing by Nick Zieminski)
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