The World Bank predicts Thai economic activity will return to 2019 levels by the end of 2022, helping support GDP growth of 3.9% next year, up from 1% this year.
Thailand's economy bottomed out in the third quarter this year, but has been picking up since.
Progress on vaccination and the resumption of tourist arrivals would continue to help support the Thai economic recovery, said Kiatipong Ariyapruchya, the World Bank's senior economist for Thailand.
Under this scenario, Mr Kiatipong expects Thailand's economic activity to return to pre-pandemic levels by the end of 2022, while the country's GDP growth rate is projected to accelerate to 3.9% next year and reach 4.3% in 2023, driven by a recovering service sector.
The World Bank left its estimate for 2021 Thai GDP growth unchanged at 1%.
"If the current pace of vaccinations at around 750,000 doses per day is maintained and there is not a further resurgence of Covid-19, domestic consumer confidence and international tourist confidence are expected to strengthen," he said.
"Given these conditions, private consumption is projected to expand by about 4% per year in 2022 and 2023, up from an estimated 1% in 2021."
While the number of foreign tourists is expected to be negligible this year, Mr Kiatipong expects international arrivals to reach almost 7 million in 2022, with a sharp increase visible in the second half of the year, before increasing further to around 20 million arrivals in 2023.
Almost 40 million foreign tourist arrivals were welcomed in 2019.
People shop for food and various items at the Yaowarat market in Bangkok's Chinatown on Monday. The private consumption is projected to improve in 2022 and 2023, as long as the domestic consumer confidence is not hampered by new Covid-19 outbreaks. (Photo: Apichit Jinakul)
He said given the recovery signs for tourism, this business sector is expected to contribute two percentage points to GDP growth in 2022 and four percentage points in 2023.
However, Mr Kiatipong said the Thai economy still faces downside risks based on several uncertainties both internationally and locally. The global trajectory of the pandemic remains unpredictable, and the probability of future waves of Covid-19 in Thailand will depend on continued progress with the vaccination rollout.
Thailand needs to monitor the effectiveness of vaccines against new strains of the coronavirus, as well as continue to implement other preventive and testing/tracing measures, he said.
The sustained reopening of international borders will undoubtedly affect the country's tourism and GDP growth, said Mr Kiatipong.
"In case a new wave of a Covid-19 variant occurs, causing the government to use rigid containment measures or even a lockdown, the Thai economy is likely to contract by 0.3% in 2022," he said. "In this event, an economic recovery is expected to be delayed by one year."
In a related development, World Bank country manager for Thailand Birgit Hansl said Thailand's poverty rate is set to remain stable at 6.4% in 2021, with an estimated 160,000 people falling into poverty since the onset of the pandemic in 2020.
However, a recent 2021 World Bank household phone survey indicates the impact of the pandemic has been particularly severe on vulnerable groups. Overall, more than half of the 2,000 respondents were affected by job losses, temporary work stoppages, and reduced working hours or lower pay.
While scarring from the pandemic shock could be long-lasting, especially in terms of job losses and school closures, digital-led development can help to offset these scarring impacts and ensure that growth is inclusive and equitable, she said.
The report recommends that while the government has taken several steps to advance the digital agenda, more can be done to develop digital services and spur the digitalisation of businesses. This includes promoting competition and incentivising inter-operability in digital markets, raising the availability of digital and complementary skills, and enhancing access to innovative finance.