Thailand: Central bank slashes 2021’s GDP growth forecast to 3 percent

With tourism contributing up to 12 percent of GDP, Thailand's economic recovery is on a slower pace than other countries that rely less on tourism. (Photo: VNA)

Bangkok (VNA) – The Bank of Thailand hasslashed its economic growth forecast this year to 3 percent from 3.2 percentmade in December, given the impact of the second wave of COVID-19 infectionsand tepid tourism.

Titanun Mallikamas, secretary of the central bank'sMonetary Policy Committee (MPC), said the second wave of infections thatemerged in December resulted in a sharp drop in foreign tourist arrivals. Thebank trimmed its projection for foreign arrivals this year to only 3 millionfrom 5.5 million.

Last year, Thailand received 6.7 million foreign touristarrivals and earned around 300 billion baht (9.66 billion USD) in tourismrevenue. The figures are far below 40 million tourist arrivals and 2 trillionbaht reported in 2019.

With tourism contributing up to 12 percent of GDP,Thailand's economic recovery is on a slower pace than other countries that relyless on tourism, he said.

A significant decline in overseas travellers is expectedto take a heavy toll on GDP in the first quarter this year, said Titanun.

In 2020, Thailand’s economy shrank 6.1 percent, comparedwith growth of 2.3 percent in 2019. Last year's 6.1 percent contraction was theworst full-year performance in 22 years since the 7.6 percent decline in 1998as a result of the Asian financial crisis.

The Bank of Thailand forecasts the economy will takearound 2.5 years to recover to the same level as before the pandemic.

Despite the downgrade on growth this year, the centralbank predicted the Thai economy would expand by 4.7 percent in 2022, mainlysupported by a fast recovery in merchandise exports, in line with the expansionof trading partner economies as well as stimulus measures recently announced.

Amid the global economic recovery, the Bank of Thailandupgraded its export growth outlook to 10 percent this year from 5.7 percentearlier. The improving economic momentum of trading partners is the key factorsupporting export growth, Titanun said.

He said the MPC on March 24 voted unanimously to maintain the policy rate at 0.5percent for a seventh straight meeting, aiming to support an economic recoverythat remains highly uncertain./.

VNA