The government's planning unit has downgraded its economic growth forecast for a third time to a range of 0.7-1.2% this year from 1.5-2.5% made in May, 2.5-3.5% made on Feb 15 and 3.5-4.5% growth made in November last year, as Covid-19 cases surge.
Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC), said the economy has yet to enter a recession but it has lost growth momentum since the third wave of the outbreak started in April.
The agency has based its growth projection on three scenarios: 0.7%, 1% and 1.2%.
"If the infections cannot be contained in the third quarter, and the lockdown is not relaxed in the fourth quarter, the economy could grow by only 0.7% this year," he said.
"But if the export sector maintains its growth momentum, with a rise in private investment and government expenditure, the economy could grow 1% this year."
According to Mr Danucha, to achieve 1.2%, the government needs to contain Covid-19 infections within the third quarter and relax its rigid restriction measures as soon as possible and maintain the growth momentum of the export sector for the remaining months.
Mr Danucha said the risk factors for the economy this year remain the relatively high rate of new infections and a delay in vaccine distribution as well as the efficiency of existing vaccines to cope with new variants of Covid-19.
"Economic growth over the rest of the year is likely to be subject to the following vital limitations and risks, including the uncertainty arising from the new wave of Covid-19; the fragile financial conditions of both households and businesses amid a high unemployment rate with additional impacts from a resurgence of Covid-19; risks to exports and manufacturing sectors affected by the outbreak in industrial areas, coupled with the constraints on the global value chain and international logistics; and the volatile global economic and financial situation," he said.
Nevertheless, the economy in 2021 is likely to recover gradually from last year, with the following key supporting factors: the recovery of the world economy and global trade; support from government spending and stimulus measures; the improvement of agricultural income; and the low growth base of the economy in the latter half of 2020, said Mr Danucha.
The NESDC expects that the export value of goods and private investment will be instrumental to economic growth this year. Exports are projected to grow by 16.3% this year, up from 10.3% growth in May's forecast, with private investment growing 4.7% this year from 4.3% in the earlier projection.
In a related development, the NESDC reported yesterday the economy increased by 7.5% year-on-year in the second quarter after a 2.6% contraction in the previous quarter. After seasonally adjusted, the economy grew by 0.4% from the first quarter.