Thai economic planners are still hoping for mass foreign tourism to return in the last quarter of 2021 but the projected numbers for visitors are tumbling as uncertainty grows over when the kingdom can securely open its doors. In the meantime, the government is banking on a return of consumer confidence and a continued buoyancy in exports to see the Thai economy achieve growth of approximately 3% this year setting things up for a recovery at the end of 2022 to pre-pandemic levels.
Economic analysis and data revealed by Thailand’s top planners today show the window for reopening Thailand to foreign tourism, while still open for the October 1st this year, may be closing. A top economist has also predicted things will not return to pre-pandemic levels until the third quarter of 2022.
A top Thai economist revealed on Monday that he only foresaw the economic situation in the kingdom returning to pre-pandemic levels in the third quarter of 2022.
Somprawin Manprasert, the chief economist with Bank of Ayudhya was speaking as the Secretary-general of the National Economic and Social Development Council (NESDC), Danucha Pichayanan, gave a press conference to highlight a revised figure of 6.1% for the contraction of the country’s economy in 2020.
‘Having had a bad crash, the economy was hit on the back by the second wave, so it’s difficult to recover,’ the bank economist observed.
Biggest crash since the Asian Financial Crisis
The figure represents the biggest economic crash that Thailand has seen since the 1998 Asian Financial Crisis but is lower than the figure projected by economists at the height of the virus outbreak and compares well, for instance, to the United Kingdom which is projected to see a 9.9% contraction and the European Union with 8.3%.
The United States, despite being one of the countries which saw the highest number of infections and deaths, saw its economy contract by only 3.5%.
Momentum slowed in the last quarter of 2020 but the recovery continued with 1.3% growth
The Bank of Thailand recently suggested a 6.5% contraction but the latest GDP figures for the last quarter of 2020 showed the economy only fell back by 4.2% compared to 2019 beating analyst estimates by over a percentage point.
The Thai economy began to gain steam in the third quarter of 2020 and grew by 6.2% from the previous quarter but the second wave of the virus slowed momentum towards the end of the year to a growth rate of only 1.3% from the third to the fourth quarter.
Uncertainty about the critical foreign tourism sector
Economists, however, are concerned about the lasting impact of the second wave of Covid-19 and also the uncertainty surrounding the country’s critical foreign tourism industry.
This factor has deepened the loss felt by the economy in the opening quarter of this year as it is normally a lucrative foreign tourism season.
This income, valued in 2019 at ฿2 trillion, was flowing into the kingdom this time last year but is now nearly entirely absent in 2021.
Planners now only project 3.2 million foreign tourists in 2021 down from 5 million set some weeks ago
Presenting the confirmed data for 2020 and reviewing the outlook for 2021 going forward, at a press conference on Monday, Danucha Pichayanan, the Secretary-general of the NESDC was cautious about the outlook for the foreign tourism sector and predicted only 3.2 million arrivals this year.
This indicates a shift from some weeks ago when Finance Ministry officials paired the figures back to 5 million based on a reopening of the country by October 1st next.
The latest comments suggest this window, while still open, is starting to close at least based on current assessments by health and economic planners.
Cautious and wary officials at the Ministry of Public Health monitoring developments carefully
Thai health officials are carefully monitoring the real efficacy of Covid-19 vaccination campaigns worldwide and the threat that will still be posed to the country by the disease.
They are adopting a cautious stance as the country moves to implement its own vaccination campaign commencing this month.
Never before have medical issues been so linked with economic planning.
Last week, officials shut down plans by private organisations and local authorities to self vaccinate in what is seen as confirmation that caution is the overriding government policy to protect public health.
On Monday, Dr Opas Karnkawinpong, the Director of the Department of Disease Control at the Ministry of Public Health, confirmed that an African strain of the virus had been found in state quarantine with a foreigner, a gem buyer, inporting it from that continent.
Growth outlook for 2021 reduced to 3%
The result of this, according to Mr Danucha, is that the projected GDP growth rate for 2021 is now in the order of 3% or a 2.5% to 3.5% range, down by 1%.
On a positive note, exports are booming and are now projected to grow by 5.8% driven by economic stimulus in western countries such as the United States, strong demand for Thai products including foodstuffs and new opportunities driven by trade deals.
The government is hoping this will be accompanied by a rise in consumer confidence as the current Covid-19 wave is seen off particularly if the vaccination campaign goes well.
Plummeting inflation rate helping families
Thailand has also seen plummeting headline inflation which fell in January for the 11th month in a row since March 2020.
The projected headline inflation rate for the coming 12 months is 1.2% with a core inflation rate excluding energy and food prices, coming in at 0.21% for January.
This should be of some help to struggling Thai families and some of the expats in Thailand also under pressure to get by at this time.
Inflation data gave insight into average Thai family incomes as survey base is broadened
Details on this were given by Mr Pimchanok Pitfield of the Trade Policy and Strategy Office.
He revealed that officials this year have reset the base of the figures to 2019. The indices are based on 430 prices including 89 services and 341 products.
Mr Pimchanok also revealed officials had broadened the base for the survey to 79% of Thai households with only 22% now being in Bangkok.
The figures give us an interesting insight into the household incomes of Thai families at this time. Over 71% of families have an income of between ฿6,987 and ฿50,586 per month.