Due to the impact of the latest wave of COVID-19, KResearch projects that the Thai economy will grow at a slow rate of only 1.8 percent in 2021, against our prior estimate of 2.6 percent. We are of the view that the current COVID-19 pandemic in the country is much worse than the previous one. Additionally, despite less stringent containment measures, increased concern over the domestic COVID-19 situation has prompted consumers to adjust their behavior, and dampened their confidence, resulting in lower household consumption than our previous estimate. However, our new economic forecast takes into account positive factors, including better-than-expected export growth as the global economy has bounced back faster than anticipated, and the Thai government's ongoing economic stimulus measures, such as the cash handout 'Rao Chana' ('We Win') and 'We Love Each Other' programs. Looking ahead, we are of the view that the public sector will steadily implement new stimulus measures under the THB1 trillion emergency decree loan as there is a leftover of roughly THB240 billion along with the THB130 billion from the mid-year budget under the fiscal 2021 budget. Meanwhile, in the face of the latest wave of COVID-19, it is expected that the number of international tourist arrivals in Thailand will be lower than the 2 million projected previously.
An important factor that may turn the situation around is the accelerated rollout of COVID-19 vaccines. If delayed, it is likely that the pandemic will persist, and there might be another wave of COVID-19, thus hurting confidence of international tourists. Given this, optimism for the recovery in Thai tourism as an economic driver looks grim. If the COVD-19 pandemic worsens or persists into 3Q21, KResearch expects that Thailand's 2021 GDP will not grow from that reported in 2020. Moreover, the COVID-19 containment measures and broad-based vaccination drive within the Thai public health system are seen as having certain limitations. There might be a disruption in the public health system if the number of daily infections continues to surge over 1,000 cases over the coming months, resulting in incalculable hidden costs in the Thai economy. It has become apparent that many hospitals are experiencing shortages of beds and medical equipment such as ventilators. Amid the rising cost of living, normal patients have not been able to gain access to the public health system as before and this may indirectly undermine the efficiency of the workforce. Therefore, losses that may occur could be greater than the shortfalls in consumption and tourism receipts.