World Bank cuts Thai GDP growth outlook to 2.2% this year

World Bank cuts Thai GDP growth outlook to 2.2% this year

Shiva Samui resort's beach club is completely empty on July 3, 2021, in tambon Maret, Koh Samui, Surat Thani province. (Photo: Dave Kendall)
Shiva Samui resort's beach club is completely empty on July 3, 2021, in tambon Maret, Koh Samui, Surat Thani province. (Photo: Dave Kendall)

Thailand's economy is forecast to grow 2.2% this year, down from the 3.4% projected earlier, due to the impact of a third wave of Covid-19 infections and weak tourism, the World Bank said on Thursday.

The economy contracted 6.1% last year, its deepest slump in over two decades, with the tourism sector devastated by the impact of the pandemic.

"Economic activity is not expected to return to its pre-pandemic levels until 2022, and the recovery is projected to be slow and uneven," the World Bank said in a report.

After recording 40 million foreign tourists in 2019, Thailand is expected to receive just 600,000 arrivals this year, sharply down from a previous forecast of 4-5 million, it said.

Good exports and the ongoing rollout of fiscal support measures are expected to remain important drivers of overall economic activity, the World Bank said.

The recovery is expected to accelerate in 2022, with GDP growth projected at 5.1%, it said, noting risks to growth were skewed to the downside and the outlook remained uncertain.

The GDP outlook compared with growth of 1.8% this year and 3.9% in 2022 projected by the Bank of Thailand, which recently said growth could miss forecasts after the latest stricter coronavirus containment measures.

Given Covid-19 relief and recovery efforts, the country’s public debt level is expected to rise to 62% of GDP in 2022, exceeding the government's target ceiling of 60%, but risks to fiscal sustainability remained manageable, the World Bank said.

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