Finance ministry cuts 2021 GDP outlook

Finance ministry cuts 2021 GDP outlook

Growth forecast cut to 1.0% from 1.3%, Q3 seen contracting 3.5% on year

Volunteers line up during a drill as they prepare to reopen for tourists with coronavirus disease prevention measures at Suvarnabhumi airport on Wednesday. (Reuters photo)
Volunteers line up during a drill as they prepare to reopen for tourists with coronavirus disease prevention measures at Suvarnabhumi airport on Wednesday. (Reuters photo)

The Finance Ministry on Thursday cut its 2021 economic growth forecast to 1.0% from a previously projected 1.3% expansion, the fourth such revision this year, as the country struggles to recover from the pandemic.

Thailand suffered a 6.1% economic slump last year, after the collapse of its tourism sector. The country imposed tougher restrictions in July and August this year that slowed economic activity.

The ministry expects the economy to have contracted by 3.5% in the third quarter year-on-year before growing by 3% in the final quarter of the year, when Thailand will reopen to vaccinated foreign visitors without quarantine.

The growth outlook downgrade was due to the severe outbreak and lockdown in the third quarter, Pornchai Theeravet, head of the ministry's fiscal policy office, told a briefing.

"But the situation has improved, leading to more economic activity," he said. "Economic growth in 2022 is expected to accelerate to 4%, driven by continued export growth and a recovery in tourism."

Earlier, the ministry predicted 4-5% growth in 2022.

The ministry trimmed its 2021 forecast for exports, a key growth driver, to a 16.3% increase from a previous forecast 16.6% rise. For next year, it projects 3.8% export growth.

It expected only 180,000 foreign tourists to spend 10 billion baht this year, and projected 7 million tourists with spending of 380 billion baht next year.

Foreign tourist spending generally accounts for 12% of Thailand's gross domestic product (GDP). In 2019, nearly 40 million foreign visitors spent 1.91 trillion baht.

Thailand's overall economic stability remained strong, but possible risks from global volatility might affect capital movements and warrant close monitoring from the ministry and the central bank, Mr Pornchai said.

"We have worked closely and are ready to introduce measures to manage volatility," he said, without giving further details.

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