Outlook Quarter 2/2021

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EIC projects the Thai economy to grow by 1.9% in 2021 (revised downward from 2.0%) after greatly impacted by domestic pandemic resurgence which is projected to take approximately 4 month (April-July) to contain, causing private consumption, especially face-to-face activities, to significantly decline. Meanwhile, foreign tourist arrivals is projected down to only 0.4 million persons despite reopening plans in the latter half of the year, as many countries remain cautious to ease restrictions for cross-country travels due to concerns for new COVID variants. Subdued tourism will add to deeper economic scars among businesses and workers, particulary in tourism related sectors. Nevertheless, the Thai economic growth will not slow down much further from previous forecast, owing to robust export growth in line with global economic recovery, especially among developed economies with advanced vaccination paces. Another equally important push factor is the government support from both 240 billion baht under 1-trillion-baht loan decree and projected additional 100 billion baht under newly launched 500-billion-baht decree. Going forward, the Thai economy is expected to gradually recover to reach pre-COVID level in early 2023 and still faces downside risks from possible longer-than-expected pandemic containment timeline and slow vaccination progress which could make economic recovery more fragile and delayed. Therefore, improvement in the vaccination pace to help boost confidence and jump start short-term economic recovery, followed by economic restructuring toward new normal standard, will be crucial for minimizing permanent output loss for the Thai economy.