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15 Feb 2021

Thai Economy

Thai economy in 2021 to recover at 2.6%; downside risk lies in Thailand’s reopening for international tourists in the last quarter of the year (Business Brief No.3912)

  • ​The Thai economy in 2020 shrank less than expected due to the support of the government's stimulus packages. In 2020, the Thai economy contracted by 6.1 percent, which is slightly less severe than KResearch's projection of -6.7 percent. The smaller-than-expected contraction can be primarily attributed to the government's stimulus measures, particularly the “Let's Go Halves" co-payment scheme wherein the amount of money spent under this program accounted for 0.3 percent of GDP. Hence, Thailand's household spending has rebounded into positive territory after shrinking for the past two quarters consecutively. Moreover, the global economic recovery helped Thai exports for 4Q20 to see a smaller-than-expected contraction of 2.0 percent. However, the gaining momentum of economic recovery in 4Q20 is interrupted by the new wave of COVID-19 outbreak which started in mid-December 2020 and has persisted until now. Looking forward into the remainder of the year, if Thailand is not severely hit by a third wave of COVID-19 in the near future, plans to gradually lift border restrictions to allow international tourists to enter the country could finally proceed in the last quarter of the year. KResearch is of the opinion that the Thai economy in 2021 will expand at 2.6 percent (in an estimated range of 0.0-4.5 percent).
  • The pending arrival of vaccines is a key factor in determining how and when to reopen the country to foreign tourists during the second half of 2021, since uncertainties over vaccine supply, broad-based vaccine distribution to encompass the majority of the population, and its effectiveness remain issues that should be monitored. Taking into account the current situation, the vaccine supply bound for Thailand may be insufficient to justify projected numbers of international tourists at 2.0-4.5 million people in 2021. All in all, Thailand's GDP will likely be inclined to the lower end of the range of 0.0 - 4.5 percent. Under such circumstances, the Thai government may have to shoulder a heavier burden in providing financial assistance to businesses and households affected by pandemic-induced economic woes.


Thai Economy

GDP