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The World Bank now expects that the Thai economy to expand by 4 per cent in 2021, according to the latest World Bank Thailand Economic Monitor report “Restoring Incomes, Recovering Jobs” released on Wednesday (Jan 20).
This projection is an improvement to the country’s economic performance last year where a 6.5% contraction was expected.
In 2020, weak global demand, the sharp decline in international tourist arrivals, and domestic mobility restrictions depressed goods and services exports and private consumption.
Exports and private investment are estimated to have declined by 18.5 percent and 4.4 percent respectively, while household consumption declined by 1.3 percent.
The resulting declines in income have created economic hardship for many, though the Government has made good progress in implementing a substantial package of measures to support households and firms.
But the speed of economic recovery in Thailand has been slower than neighbouring countries such as Malaysia, Vietnam and China, especially in terms of industrial and service output.
1.5 million Thai people may have entered poverty in 2020
Nevertheless, projections indicate that an additional 1.5 million people may have entered poverty in 2020 due to the economic impacts of COVID-19, based on a poverty line of US$5.50 (2011 PPP) per day.
This year, the economy is expected to recover gradually, despite the recent second outbreak of COVID-19, and growth is forecast to pick up further to 4.7 percent in 2022.
However, the recovery remains vulnerable to downside risks, including from an extended resurgence of the pandemic resulting in a prolonged stagnation in tourism and domestic activity, a weaker-than-expected global recovery that could lead to continuing trade and supply chain disruptions, and high household debt levels.
The report recommends that in the short term, the government put in place training programs to improve workers skills and provide financial support while they get back to work. Ongoing efforts are required to ensure that education and training matches the needs of employers.
Thailand needs more employment stimulus policies
The number of unemployed persons jumped to more than 800,000 in October 2020 from only 370,000 in 2019, while the share of private investment in GDP in the third quarter of 2020 fell to its lowest level (14 per cent) since 2003.
Household debt reached 83.8 per cent of GDP in October, the highest level in 18 years.
To resolve these challenges, Thailand needs more employment stimulus policies, a proper debt-restructuring program and medium to long-term growth stimulus measures.