BANGKOK • Thailand's economy faces severe shocks from the coronavirus pandemic and a recovery is expected to take at least two years to get back to pre-pandemic levels, the country's new central bank governor said yesterday.

South-east Asia's second-largest economy, which is heavily reliant on trade and tourism, could shrink a record 7.8 per cent this year, the Bank of Thailand (BOT) predicted.

Economic problems can be solved but it will take time as there are "no magic bullets", Mr Sethaput Suthiwartnarueput said.

"The shocks are very severe, most notably on tourism," he said, adding that the sector could lose 1.6 trillion baht (S$69.4 billion), or 10 per cent of gross domestic product, with foreign arrivals expected at 6.7 million this year, against nearly 40 million last year.

But the country has a strong external position to withstand any shocks, said Mr Sethaput.

The economy, which suffered its worst contraction in 22 years in the June quarter, is expected to post some growth in the second quarter of next year, he said.

Mr Sethaput said the BOT would ensure monetary policy and liquidity would not hinder the recovery. "Our policy rate is the lowest in this region and a record low with limited room, so other measures... will have to play a major role," he said.

The BOT has cut the key rate three times this year to an all-time low of 0.5 per cent to support the economy. It will next review policy on Nov 18.

The central bank would consider more measures as appropriate but was in no rush to introduce them.

It would also encourage capital outflows to help ease the baht strength, Mr Sethaput said.

The BOT would also monitor growing street protests which could affect confidence, consumption and tourism, he added.

REUTERS