BoT decreases growth outlook to 3.2% in 2021

With uncertainties and downside risks remaining, the Bank of Thailand has slashed the country's GDP growth outlook for next year by 0.4 percentage points, attributed chiefly to an anticipated delay in tourism recovery.

GDP growth was lowered to 3.2% from 3.6% projected previously as the impact of a prolonged outbreak abroad and a new outbreak in Thailand is likely to delay a recovery in tourism, said Titanun Mallikamas, assistant governor of the monetary policy group.

The central bank forecasts foreign tourist arrivals in 2021 to tally 5.5 million, a decline from an earlier projection of 9 million.

Although there has been progress in Covid-19 vaccine development, vaccine distribution is expected to be limited, said Mr Titanun.

The central bank predicts vaccination coverage in advanced economies to be at 30% of the population in the second quarter of 2021, with the coverage ratio in key countries for Thai tourism at 30% in the third quarter.

"For Thailand, vaccination coverage is projected to be 20% in the fourth quarter of 2021. Most countries, including Thailand, would achieve herd immunity with around 60-70% of vaccination coverage in the second half of 2022," he said.

Under this scenario, Thailand is expected to re-open to foreign travellers from the second half of 2021, with arrivals gaining in the final quarter, said Mr Titanun.

Two scenarios were envisioned for re-opening to foreign tourists, dependent on vaccine development.

A 14-day quarantine period for foreigners with a special tourist visa is the first scenario, while the other forgoes a quarantine for mandatory vaccination and infection test certificates, he said.

The number of foreign tourist arrivals is expected to continue increasing in 2022, in line with vaccine development and herd immunity, said Mr Titanun. Under this scenario, vaccination and quarantine are not required.

For 2020, the central bank upgraded its GDP contraction forecast for Thailand to 6.6% from 7.8% following improved signs of an economic recovery in the third and fourth quarters, particularly exports and domestic consumption.

"Domestic demand, especially private consumption, improved in part because of fiscal stimulus measures and the recovery of economic activities following the relaxation of [virus] containment measures," said a central bank statement.

Full-year merchandise exports are projected to contract by 7.4%, up from 8.2%, while private consumption is forecast to shrink by 1.4% instead of 3.5%.

The new Covid-19 outbreak is expected to be contained after 1-2 months, assuming a restricted and short duration of the infection spread, said Mr Titanun.

"There could be lockdown measures in some areas, but this would not be similar to the nationwide lockdown in April," he said.