2021 keys are growth, restructuring
Economy projected to recoup expected 6% GDP contraction in 12-18 months
The two main directions of next year's economic policies are to sustain economic growth and restructure Thailand's economy, says Deputy Prime Minister Supattanapong Punmeechaow.
Sustaining a GDP growth rate of 3.5-4% is crucial and the government projects the economy will recoup its expected 6% GDP contraction this year within the next 12-18 months, said Mr Supattanapong.
Besides capital reserves allocated from the 1-trillion-baht emergency loan decree, fiscal policy will be used to shore up next year's economic growth, he said.
The extent of fiscal policy implementation will depend on economic conditions on a quarterly basis, said Mr Supattanapong.
If a second wave of Covid-19 occurs and Thailand faces another lockdown, the anticipated growth forecast would have to be revised, he said.
In addition to sustaining economic growth momentum, restructuring the economy is needed in 2021, with focal points of restructuring centred on digital technology, electric vehicles and food industry development, said Mr Supattanapong.
But if there are no investors expressing serious interest in the S-curve industries initiated by the government, this means Thailand has become less attractive despite the country's infrastructure, such as 5G technology for wireless communication and submarine fibre-optic cable system, said Mr Supattanapong.
The trade war and the pandemic have caused a change of thought for global manufacturers as they prefer to manufacture products that are sufficient for domestic consumption rather than for exporting, he said.
With this mindset in place, manufacturers from emerging countries such as Indonesia and Vietnam could relocate their production bases to Thailand, said Mr Supattanapong.
But the government wants to see investments in new industries rather than traditional industries that are labour-intensive, he said.
Bank of Thailand governor Sethaput Suthiwartnarueput said stimulus packages are needed to support economic recovery momentum in 2021, while the central bank emphasises economic growth that is compatible with building up financial stability.
Against the backdrop of an uneven economic recovery, the government's stimulus measures should continue to be implemented until at least the first half of next year, said Mr Sethaput.
For 2021, domestic consumption and exports are expected to continue improving thanks to the government's stimulus measures and the global economic recovery, he said.
Still, the central bank remains concerned over the rising underemployment rate and fragile conditions in the labour market.
For this year, Thailand's GDP growth rate could be better than the existing forecast after economic conditions bottomed out in the second quarter, with signs of improvement emerging in the third quarter.
The Bank of Thailand predicts that Thailand's GDP will shrink by 7.8% this year.
For 2021, the central bank forecasts a 3.6% growth rate under the assumption that foreign tourist arrivals would reach 9 million.
"This year's contraction in GDP could improve from the existing forecast, but next year's growth projection could be lower than expected," said Mr Sethaput.
"In case economic growth does not resume, this could affect financial stability."