SCB EIC sees recovery in mid-2023
SCB Economic Intelligence Center (SCB EIC), the research house of Siam Commercial Bank (SCB), has forecast Thailand's economic recovery would be delayed until mid-2023 because of the impact of the prolonged pandemic.
The research house predicted Thailand's economy would return to the 2019 level in the middle of 2023, a delay from the beginning of 2023 as previously projected.
The delayed recovery is mainly due to the continuing infections, said its chief economist Yunyong Thaicharoen.
Under this scenario, SCB EIC has slashed the country's GDP growth projection for 2021 from 0.9% previously to 0.7%, mainly caused by lower domestic consumption.
The government's lockdown measures to contain new cases have severely affected domestic consumption. As a result, the research centre has cut its domestic consumption growth forecast from growth of 0.1% earlier to a 0.8% contraction this year.
Even though the export sector is the key engine of Thailand's growth momentum, supply chain disruption due to the pandemic has hurt the export sector.
SCB EIC has maintained its export growth forecast for this year at 15%, although the sector showed strong growth at 19.4% year-to-date, on a year-on-year basis, Mr Yunyong said.
Due to Thailand's prolonged outbreak and the restrictive policies of outbound tourism of many countries, the recovery of Thailand's tourism sector is expected to be delayed as well.
The research house has downgraded its foreign tourist arrivals forecast this year from 300,000 to 170,000. However, the research house expects tourist arrivals would increase to 6.3 million in 2022, thanks to the improving outbreak situation locally and internationally, as well as a low base effect.
Thailand's daily new infections are believed to have peaked in August, and the situation has started to improve. However, new infections per day could increase after the government eased the lockdown measures.
For 2022, the research house expects the Thai economy to grow 3.4% from a recovery in both domestic and external demand following higher vaccination rates.
With lower and longer-impact on Thailand's economy from the pandemic, the government's existing second borrowing under the Emergency Decree worth 500 billion baht would not be enough to subsidise and recover the Thai economy. It is reasonable if the government were to borrow an additional 500 billion baht-1 trillion baht, Mr Yunyong said.