The Thai economy is expected to contract by 8.5 per cent in 2020, the Fiscal Policy Office (FPO) said on Thursday.
For 2021, the economy is expected to expand by about 4-5 per cent.
The FPO’s new economic predictions were given on Thursday for the first time in three months after the agency decided not to provide any new economic numbers until the coronavirus outbreak within the country became more stable.
The country has reported zero locally transmitted case over the past two months.
The FPO’s new number is now in line with the Bank of Thailand (BOT)’s predictions that the Thai economy is heading into a recession of 8.1 per cent in 2020, before bouncing back from a low base to 5 per cent by 2021.
The FPO’s new GDP projection for 2020 is based on the expectations that export value will contract by 11 per cent and the number of tourists will drop by 82.9 per cent.
The BOT believes that export value will contract by 10.3 per cent and the number of tourists will drop from 39.8 million in 2019 to 8 million in 2020.
The Ministry of Commerce said last Friday that export value has already dropped by 7.1 per cent down to US$114.34 billion during the first six months of 2020.
According to the Ministry of Tourism and Sports, tourist arrivals also dropped by 66 per cent year-on-year to 6.7 million during the first six months of 2020.
Consequently, international tourism receipts have also declined by 65 per cent year-on-year, down to 332 billion baht (US$10.5 billion).
The ministry’s data also showed that there were no tourists or receipts between April and June 2020 with a possible income loss of nearly 400 billion baht.
The Ministry of Finance’s FPO said the main reasons for its latest GDP outlook are the impacts from the outbreak which have wreak havoc to country’s export and tourism sectors.
Apart from the huge drop in the number of products being exported and the number of foreign arrivals, domestic consumption, which includes private investment, is expected to contract by 2.4 and 12.6 per cent respectively.
Public consumption and investment are expected to expand, however, by 4.3 per cent and 9.7 per cent respectively.
Lawan Saengsanit, the FPO’s director, said the Thai economy is predicted to be in a worse state in the second quarter of 2020.
However, with businesses reopening, the government’s measures to stimulate domestic tourism should help create jobs which will support economic recovery during the second half of 2020, he added.
Lawan said the easing of lockdown measures and the entry ban should bring back some foreign tourists during the second half of the year. The government’s relief measures are also supporting an increase in economic activity.
At the same time, businesses that are expected to have a strong recovery and growth are consumer and digital products due to the expansion of e-commerce activity under the new normal.