GDP growth for the year revised down after economy contracts in Q1

Thailand’s National Economic and Social Development Council downgraded the country’s GDP growth projection on Monday due to the knock-on effects of the Covid-19 pandemic and the country’s inability to control the rate of infections.

The third wave of the pandemic is continuing unchecked in Thailand with over 70,000 new Covid-19 cases since the wave began on April 1.

Attempts by the government to lockdown and immunize local populations have done little to contain the rate of infection with nearly 10,000 new cases on Monday.

The NESDC said that Thailand’s GDP contracted 2.6 per cent in the first quarter of this year (-2.6%) due to the third wave.

The council also revised its the GDP growth projection down to 1.5 – 2.5 per cent for 2021 from its earlier forecast of 2.5 – 3.5 per cent.

The news will not be welcomed by the administration that has tried to balance the need to lockdown the country with economic considerations.

Prime Minister Prayut Chan-ocha cited the economy as a major reason he did not lockdown the country during the Songkran break, a decision analyst say led to a nationwide spread of the disease.

Thailand’s economy has not yet recovered from a disastrous 2020 when the economy contracted by 6.1 per cent (-6.1%).

A national lockdown and the closure of the country’s borders resulted in economic hardship for the hospitality and tourism sectors – major sources of revenue for the country.

It was hoped that Thailand’s previously stellar record on Covid-19 would see the country open up in 2021 and a return of foreign tourists. However, the slow rate of inoculations and previous lethargy in the government’s vaccination program means that the country will not see the hospitality return to normal until early 2022 at the earliest, analyst say.

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