The Finance Ministry's Fiscal Policy Office (FPO) has slashed Thailand's economic growth forecast to less than 3% this year as projected foreign tourist arrivals are substantially lower given the second wave of the pandemic.
GDP growth is projected at 2.8%, down from 4.5% estimated in October 2020.
"The lower economic growth projection for 2021 is attributed to an expected decrease in foreign tourist arrivals," said Kulaya Tantitemit, acting director-general of the FPO.
The FPO forecasts full-year foreign tourist arrivals at 5 million this year, down from 8 million projected previously.
Lower foreign tourist arrivals translates to lower tourism revenue. International tourism receipts are forecast at 260 billion baht this year, down from 400 billion expected earlier, according to the FPO.
Foreign tourist arrivals totalled 6.7 million during the first 11 months of 2020, down 81.2% from 36 million registered in the corresponding period of 2019, according to the Tourism and Sports Ministry.
Receipts generated from both foreign and local tourists totalled 760 million baht between January and November 2020, a drastic decline from around 3 trillion baht registered in full-year 2019.
Tourist receipts account for about 12% of Thailand's economy, the second largest in Southeast Asia.
Thailand had zero foreign tourist arrivals from April to September 2020 due to stringent travel restrictions put in place to safeguard against the pandemic.
The FPO forecasts exports to expand by 6.2% in 2021 based on an economic recovery for Thailand's major trading partners, such as China, the euro-zone bloc, Japan, Malaysia, the US and Vietnam.
GDP growth for 15 of Thailand's major trading partners is expected to expand by a combined 5.2% from a 3.6% contraction in 2020.
Key downside risks clouding Thailand's economic growth prospects this year are a possible delay in global vaccination, a renewed lockdown as a result of the worsening pandemic crisis or mutating coronavirus strains, and exacerbating trade tensions between China and the US, said Ms Kulaya.
The baht's value is expected to hover at an average of 29.9 against the US dollar in 2021. This would translate into a 4.5% appreciation rate compared with the average dollar-to-baht value registered in 2020, according to the FPO.
On the basis of a nominal effective exchange rate, the baht's average value would strengthen by 0.1% against the currencies of Thailand's trading partners. The price of Dubai crude is expected to average US$50.5 per barrel, up 19.5% year-on-year, thanks to higher demand from an anticipated global economic recovery, she said.