Thailand's GDP could see a steep contraction similar to the second-quarter decline if nationwide lockdown measures are imposed to contain a fresh round of outbreaks, says the World Bank.
Should a new round of infections result in a lockdown in Bangkok or across Thailand, overall economic activities would be impeded, said Kiatipong Ariyapruchya, senior country economist for Thailand at the World Bank.
Under this scenario, domestic consumption would diminish and cause the unemployment rate to edge up, with Thailand's GDP nudging lower as a result, said Mr Kiatipong.
"In the event of a lockdown to contain the [domestic] outbreak, the country's GDP could experience a steep contraction similar to the second quarter's decline," he said.
Thailand's GDP shrank 12.2% year-on-year and 9.7% quarter-to-quarter on a seasonally-adjusted basis in the second quarter as the economy took heavy blows from the outbreak and the nationwide lockdown.
Bloomberg reported the outlook for Thailand's economy this year is the most dire in Asia, given heavy reliance on exports and tourism, both of which have suffered heavy blows amid the outbreak, with the strong baht compounding grievances for exporters.
The World Bank will review Thailand's economic growth outlook next month.
Southeast Asia's second largest economy is projected to see a 8.3% GDP contraction this year before recovering to a 4.9% growth in 2021, according to the World Bank.
The full-year GDP contraction for 2020 could arrive at an improved ratio since the economy was anticipated to reach a trough in the second quarter, according to the international lender.
At least two and a half years will be needed for the country's GDP to recover to pre-pandemic levels, said Mr Kiatipong.
LOW PRODUCTIVITY
Thailand needs to boost its GDP growth to 5% on average annually by 2025 if it wants to transition into a high-income country by 2037, according to the World Bank.
Becoming a high-income country by 2037 is part of the 20-year national strategy plan (2018-37) devised by the Prayut Chan-o-cha government to ensure the country achieves its vision of becoming "a developed country with security, prosperity and sustainability in accordance with the sufficiency economy philosophy," according to the National Economic and Social Development Board.
To achieve 5% GDP growth on an annual basis, Thailand needs to double both public and private investments to 40% of GDP from the existing 20%, according to the World Bank.
Thailand also needs to maintain its growth trajectory in total factor productivity, a measure of economic efficiency and accounts for part of the differences in cross-country per-capita income, according to the international lender.
Apart from supporting Thailand's recovery from the outbreak, productivity development and upgrading the country to high-income status will sustain a long-term economic expansion, said Birgit Hansl, the World Bank's country manager for Thailand.
"Increasing the productivity of firms within the manufacturing sector itself will also play a key role in job creation and more inclusive growth particularly in the post-Covid recovery phase," said Ms Hansl.
Thailand's ability to improve standards of living depends on the country's capability to raise output per worker or increasing working hours.