Covid-19 again lowers Thai economic growth forecast to 2.3%

Thailand’s economic growth forecast was lowered to 2.3% as the tourism outlook remains bleak as Covid-19’s third wave pummels the country. Back in October 2020, the Finance Ministry’s Fiscal Policy Office had originally predicted a 4.5% growth for Thailand’s GDP, when Covid-19 seemed to be waning in the country. By January, as the second wave hit, projections were reeled in to 2.8%, and this month it was dropped again another half per cent.

The forecast assumes the government will enact economic stimulus packages worth at least 100 billion baht between now and the fiscal year close on September 30. The FPO expects a fourth-quarter economic recovery to boost the year’s average growth with yearly figures ranging from 1.8% to 2.8%.

Thailand had done relatively well during the pandemic, but the third wave is infecting much higher numbers and, with the vaccine rollout crawling, Covid-19 domestically is negating the positive effects of the world’s economic recovery. A recent evaluation estimated the Thai economy could lose up to 100 million baht per month. Last year Thai exports fell 6.6% but this year the thriving export sector is projected to grow 11%.

But tourism makes up at least 12% of Thailand’s gross domestic product, reportedly 2 trillion baht brought in during 2019, and the Covid-19 outbreak and slow vaccinations mean more delays in reopening to travellers on a large scale. Last year was buoyed as China is Thailand’s top tourism market and the first place to lockdown in the early stages of Covid-19. Last year saw only 6.7 million travellers arriving, which brought an 83% drop in tourism revenue for 2020.

After the ambitious plan to reopen Phuket and tourism sandbox locations July 1 and fully reopen Thailand in October, Covid-19 outbreaks are dashing hopes and the 2021 travel projections were lowered to just 2 million travellers, a devastating blow to the economy.

SOURE: ASEAN Economist