ADB: Thailand’s economy to shrink by 8 percent in 2020 hinh anh 1Illustrative photo (Source: NKA)

Bangkok (VNA)
- Despite relatively effective containment of Covid-19, the impact of the pandemic on Thailand's economy has been more severe than expected and economic recovery remains elusive, with annual GDP poised to shrink by 8 percent, says the Asian Development Bank (ADB).

The latest projection is a big dip from the bank's April forecast of a 4.8 percent contraction, local media reported.

External demand weakness is likely to continue in the near term, the Bangkok Post newspaper cited a report titled "Asian Development Outlook 2020 Update: Wellness in Worrying Times". Even with trade partners gradually recovering as the COVID-19 situation allows them to relax containment measures, economic activity is projected to remain significantly below pre-pandemic norms in many countries.

Thailand's earnings from exports of goods and services are now projected to contract more deeply in dollar terms, by 22.3 percent in 2020, then rebound to 7.6 percent growth in 2021, according to the ADB.

The deeper export contraction will weigh on private consumption and investment. Private investment is now expected to contract by 12.1 percent in 2020, then recover with 4 percent growth next year, the ADB said.

Weak demand at home and abroad, excess production capacity and persistent uncertainty about the course of the pandemic will undermine business confidence and hamper investment this year, said the Manila-based lender.

Public spending seems to be almost the sole economic driver this year.

Public consumption is now expected to expand by 3.8 percent, revised up from 2.4 percent projected in April, due to speedy disbursement of relief spending, the ADB said.

Meanwhile, public investment is predicted to expand, especially in infrastructure projects for state-owned enterprises, and this will be the key to sustaining the economy to the forecast horizon, the bank said.

The ADB forecasts Thailand's GDP to grow by 4.5 percent in 2021./.