Thailand Economic Outlook


Respond, Recover, Thrive

An evolving perspective on the economic impacts of COVID-19

Executive Summary

COVID-19, which first emerged in the Chinese city of Wuhan in December 2019, has killed more than 2 million people in at least 190 countries and territories globally, according to the World Health Organization. Hence, the virus outbreak has become one of the biggest threats to mankind and left economic scars both in the real economy and the financial system.

According to the October 2020 IMF World Economic Outlook, the world economy is projected to shrink by 4.4% in 2020, a less severe contraction than previously predicted. The upward revision in the IMF's 2020 growth forecast reflects better-than-anticipated growth, especially in the United States and the Eurozone, where economic activity began to improve after loosening lockdown restrictions, as well as indicators of a stronger recovery in the following months. However, the pandemic still caused an unprecedented collapse in the second quarter; consequently, this health crisis marks the worst economic collapse since the 1930s Great Depression. While China remains the only major economy estimated to record expansion, the overall global economy’s long ascent back to pre-pandemic levels, especially amid the resurgence of the virus towards the end of 2020. Despite vaccine rollouts and accommodative stance of monetary policy as well as massive fiscal stimulus from governments, the IMF warned that the world economy still faces a downside risk and an uneven recovery until the coronavirus is successfully contained.

Although there was an improvement seen in the final quarter, Thailand’s GDP in 2020 registered a contraction of 6.1%, the worst since the 7.6% decline in the 1998 Asian Financial Crisis. In 2021, the economy is anticipated a growth of 2.2% due to subdued export demand and slower-than-expected recovery of foreign tourism. Tourism, a principal driver of Thailand's economic growth, has been one of the hardest-hit sectors by the crisis. Despite the Special Tourist Visa (STV) scheme and vaccination rollouts in many countries, foreign tourist arrivals are expected to only reach 4 million in 2021. Moreover, it could take at least 2-3 years to return to pre-pandemic levels. Improving global growth, sizable fiscal stimulus packages and vaccine progress will be keys to underpin recovery of the Thai economy. 



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