BoT sees slower recovery in 2021
Thailand’s economic recovery is expected to take longer than previously anticipated, mainly due to the drastic decline in foreign tourist numbers, says the Bank of Thailand.
The central bank slashed its GDP growth forecast for 2021 from 5% to 3.6% as the pandemic continues to hamper international travel.
The central bank has revised down its foreign arrivals forecast for next year from the previous 16.2 million to 9 million, said Titanun Mallikamas, secretary of the Monetary Policy Committee (MPC).
The outbreak situation and the offshore impact have been more severe than expected. Several countries have been facing higher infection cases, second-wave outbreaks and longer lockdown policies, Mr Titanun said. These factors will incur an impact on foreign travellers with plans to visit Thailand.
“With this scenario [the slow recovery of foreign tourist figures], overall economic activity will take at least two years to return to pre-pandemic levels,” he said.
The central bank earlier warned that Thailand’s tourism industry would face greater risks next year if the government continued to restrict foreign travellers from entering the country.
In the January-July period, foreign tourist numbers were 6.69 million, down 71% year-on-year, with spending down 70.4% from a year earlier to 332 billion baht.
Thailand, which had a record 39.8 million tourist arrivals last year, has recorded zero foreign visitors since April, when a travel ban was imposed by the government.
The central bank has also lowered all economic projections for next year.
Private consumption is anticipated to dip from 2.5% growth to 2%, while growth in private and public investment has been revised from 5.6% to 4.2% and from 14.1% to 11.4%, respectively.
Merchandise exports are projected to expand by 4.3%, down from 8.4%, and imports are poised for 4.4% growth, down from 7.3%.
Thailand’s economic outlook for 2020, however, has been revised up slightly by the central bank.
The economy is expected to shrink by 7.6%, narrowing from the 8.1% seen previously, after the second-quarter GDP contraction was less than forecast.
GDP fell 12.2% from a year earlier in the second quarter, the biggest decline since the Asian financial crisis of the late 1990s. First-quarter GDP saw a 2.5% year-on-year decline as Covid-19 started to take its toll on global business activity.
In other news, the MPC on Wednesday voted unanimously to maintain the policy rate unchanged at 0.50%.
The committee said the extra accommodative monetary policy, as well as additional fiscal, financial and credit measures, will help alleviate adverse impacts and lend support to the economic recovery.
Mr Titanun said the MPC also wants future government policies from various agencies to be more targeted and timely.
Policies should continuously promote employment, economic restructuring and economic recovery, he said.
The state-led strategy should focus on supply-side policies to support the changing economic structure, patterns of business operations and labour skills development consistent with post-pandemic conditions in order to ensure a sustained economic recovery, Mr Titanun said.