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Thailand cuts economic outlook despite smaller Q4 2020 GDP fall

Thailand cuts economic outlook despite smaller Q4 2020 GDP fall

IDLE. Boats that are used to transport tourists around the Chao Phraya river are seen idle due to travel bans and border closures, in downtown Bangkok, Thailand, February 4, 2021.

Photo by Jorge Silva/Reuters

Thailand now expects its gross domestic product to grow by 2.5% to 3.5% in 2021, from a previous forecast of 3.5% to 4.5%

Thailand cut its estimate for economic growth this year to 2.5% to 3.5% after suffering its worst slump in more than two decades in 2020 due to the shock from the COVID-19 pandemic.

The government had previously forecast growth 3.5% to 4.5% for this year, and the downward revision comes despite latest data showing the economy shrank less than expected in the October-December quarter as domestic activity and exports recovered after coronavirus restrictions were eased.

The vital tourism sector remains in limbo because of international travel restrictions, and a COVID-19 outbreak in December has dealt a further blow to the country’s fledgling recovery.

Southeast Asia’s second largest economy shrank 4.2% in the final quarter of 2020 from a year earlier, after a 6.4% contraction in the previous 3 months, National Economic and Social Development Council (NESDC) data showed on Monday, February 15.

On a quarterly basis, the economy expanded a seasonally adjusted 1.3% in the December quarter, after a revised 6.2% expansion in the September quarter.

Economists in a Reuters poll had forecast the economy would shrink 5.4% year-on-year and grow 0.8% quarter-on-quarter.

In 2020, the economy contracted 6.1%, the biggest fall since 1998, during the Asian financial crisis.

Thailand had largely contained the spread of the coronavirus by mid-2020 but new cases detected in December have led to infections across the country and slowed consumption and domestic travel.

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The NESDC now expects exports, also a key driver of growth, to rise 5.8% this year, rather than expand 4.2%.

But it also forecasts just 3.2 million foreign tourists this year, down from an earlier forecast of 5 million arrivals.

Last year, there were only 6.7 million foreign tourists versus nearly 40 million arrivals in 2019.

The government has supported the economy with a 1.9-trillion-baht ($63.61-billion) stimulus package, while the central bank has slashed interest rates by 75 basis points last year to a record low of 0.50%. –

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