The Thai economy will shrink at least 8.3% this year and take at least two years to return to its pre-Covid level, according to the World Bank.
However, recovery could be derailed by drought, flooding or a second wave of Covid-19, the bank warned,
Kiatipong Ariyapruchya, World Bank senior economist for Thailand, released the bank's economic update on East Asia and the Pacific on Tuesday.
He warned that a second wave of the coronavirus disease, plus drought and flooding, could cause the economy to shrink by up to 10.4% year-on-year this year, and recovery to the pre-Covid level could then take as long as three years.
A second wave of the disease would affect exports, tourism and the finance sector, and businesses would be again forced to shut down, like they did in March, he said.
Economic risks came from the unavailability of a Covid-19 vaccine, political uncertainty and the slow disbursement of government investment in infrastructure projects. Only half the investment budgets were disbursed, Mr Kiatipong said.
Birgit Hansl, World Bank manager for Thailand, said although economic stimulus planning was to spend the equivalent of 8-13% of gross domestic product, only 4% of GDP was actually injected into the economy.
The World Bank predicted the economy would grow by 3.5-4.9% next year.