Thai economy likely to continue shrinking until Q1 2021 – RHB Research
By Linda Khoo Hui Li
BANGKOK, Sept 17 – Thailand’s economy is likely to stay in contraction until the first quarter of 2021, said RHB Research Institute Sdn Bhd.
In a note today, the research house said the country’s economic activities were starting to show signs of improvement following the relaxation of containment measures.
“We expect real gross domestic product (GDP) growth to rebound to 5 per cent year-on-year in 2021 from a sharp contraction of 7.6 per cent this year.
“It is mainly due to the low-base effect, gradual economic recovery globally as well as the likelihood of a reopening of international borders, with mass distribution of a vaccine expected by the second quarter of 2021,” it said.
The research house expects the Bank of Thailand (BoT) to normalise its policy rate to 0.75 per cent in 2021 from a record low of 0.5 per cent this year.
BoT has maintained its policy rate at a record low for a second straight meeting on Aug 5 after having cut it three times this year – from 1.25 per cent to 1.00 per cent in February, and then to 0.75 per cent in March and further down to 0.50 per cent in May.
In July, Thailand’s Finance Ministry cut its 2020 economic forecast to an 8.5 per cent contraction in GDP from the 2.8 per cent growth projected in January due to the COVID-19 pandemic impact.
To date, Thailand has reported 3,490 COVID-19 cases with 58 fatalities; however, its economy has been hit hard, especially the tourism sector, following the government-imposed travel ban since April 3.
Although the COVID-19 situation has continued to improve, Thailand has yet to reopen its door to tourists.
On Tuesday, Thailand’s cabinet approved in principle a special tourist visa for foreign long-stay tourists to stay up to nine months in a bid to revive its tourism industry.
The long-stay foreign visitors must undergo a 14-day quarantine at the state’s alternative quarantine facilities (hotel) or hospital quarantine upon arrival before being allowed to travel freely in the kingdom.