Thai economy contracts less than expected, outlook for 2021 improves as tourism recovery looms
By Orathai Sriring and Kitiphong Thaichareon
BANGKOK, November 15 (Reuters) – The Thai economy contracted less than expected in the third quarter as companies began a slow recovery from the decline in activity due to the coronavirus, while the reopening of the tourism sector gave hope for a steady recovery.
The government has raised its outlook for economic growth to 1.2% this year, from a previous expansion forecast of 0.7% -1.2%, and has projected growth of 3.5% -4, 5% in 2022, thanks to an easing of COVID-19 restrictions and a reopening to overseas travelers to revive its vital tourism industry.
Southeast Asia’s second-largest economy fell 6.1% last year.
The economy shrank by 1.1% seasonally adjusted in the September quarter compared to the three previous months, showed data from the National Council for Economic and Social Development, against a forecast drop of 2.5% in a Reuters poll and a revised 0.1% seasonally adjusted growth in the June quarter.
Compared with a year earlier, gross domestic product (GDP) declined 0.3% in July-September, a smaller-than-expected decline than the expected 0.8% decline, and from a revised growth of 7 , 6% in April-June.
“We expect GDP to rebound strongly in the last quarter now that cases are down, restrictions are lifted and vaccine rollout is picking up steam,” said Gareth Leather, senior economist for Asia at Capital Economics.
The increase in exports and fiscal measures have helped to limit the fallout from the pandemic. The NESDC expects exports to grow 16.8% this year from a 16.3% increase seen earlier. In 2022, he forecast an export growth of 4.9%.
Exports in the third quarter increased 15.7% from the previous year, but the private sector consumption was affected by the COVID-19 brakes and fell 3.2%.
The agency has predicted 200,000 foreign tourists this year, against 150,000 seen previously, and forecasts 5 million visitors Next year. There were 40 million foreign tourists in 2019.
With a fraction of foreign tourists expected compared to pre-pandemic levels, most analysts expect the economic recovery will be slow.
The government has put in place billions of dollars in relief measures to help revive the economy while the central bank has left its key rate at a record high of 0.50% since May 2020.
“Beyond the fourth quarter, the prospects for recovery depend on how quickly the tourism sector recovers,” said Leather of Capital Economics.
(Reporting by Orathai Sriring, Kitiphong Thaichareon and Satawasin Staporncharnchai; editing by Shri Navaratnam)
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