We, at KResearch, have decided to revise downward our 2021 growth forecast for the Thai economy to 1.0 percent, from a prior estimate of 1.8 percent, because the impact of COVID-19 on the economy has become more severe than previously assessed. Due to limitations of the Thai public health system, more stringent COVID-19 containment measures have been implemented. Such measures have further affected the business sector and employment and in turn the purchasing power and confidence of consumers. Meanwhile, the government's relief measures, which are expected to help alleviate consumers' financial burdens, have failed to offset the impact of COVID-19 on the overall economy.
Meanwhile, the emergence of new COVID-19 variants and rapid increases in infections again in many countries, including Thailand, have led KResearch to cut our 2021 forecast for the number of international tourist arrivals to 250,000-650,000, from our prior projection of 250,000-1.2 million despite the reopening of the country to foreign holidaymakers under the “Phuket Sandbox" and “Samui Plus Model" programs. However, the implementation of a similar program in other locations and the number of foreign tourists visiting Thailand will rest primarily with the COVID-19 situation and the government's vaccine drive. Meanwhile, other countries continue to experience risks of the COVID-19 pandemic, as well.
In spite of this, the global economy is set to recover faster than expected. KResearch, therefore, projects that Thai exports will grow at an exponential rate of 11.5 percent in 2021. This projection takes into account risks that may stem from the shortage of shipping containers, higher ocean freight rates and issues related to COVID-19 that may cause a shortage of workers in the industrial sector.
Looking into the remainder of 2021, the Thai economic outlook will hinge on the COVID-19 pandemic, which is expected to continue unabated because of the new variants, questionable quality of COVID-19 vaccines and vaccination rate that may fall short of the target. If the pandemic persists, it is expected that the government may have to introduce additional relief measures. But, if the situation begins to improve, the government may introduce an economic stimulus package that is more effective in speeding up the economic recovery by using the budget under the executive decree authorizing the government to borrow an additional THB500 billion. Meanwhile, close attention must be paid to the protracted COVID-19 pandemic abroad because of the new variants as this may affect Thailand's tourism and exports in the future. Based on the above-mentioned factors, KResearch has revised downward our Thai economic growth forecast for 2021 to 1.0 percent.