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Thailand: Analysts predict shaky growth
Thailand’s GDP growth outlook this year remains weak as economic drivers are unreliable at this stage, with the vaccine rollout — the only positive factor for sentiment in the short term — yet to begin, says Standard Chartered Bank Thai.
The first vaccine shots in Thailand will be administered by the end of this month as the first 200,000 doses of China’s Sinovac vaccine are scheduled to arrive on Feb 24, said the government on Monday.
Last week, Thailand announced plans to inoculate 1 million of its most vulnerable people by May and start mass vaccinations in June, with the aim of administering 10 million doses a month.
The announcement was the first clear timeline for the plan to vaccinate about half of its 70 million population and comes amid criticism over the government’s vaccine procurement strategy.
It remains to be seen whether Thailand will be able to start reopening its tourism sector around mid-year as hoped by operators, said Tim Leelahaphan, an economist at Standard Chartered Bank Thai.
The export recovery remains tentative despite generally better trade data recently, while automobile exports have yet to show clear signs of recovery, said Mr Tim.
Political noise has increased along with the recent resumption of anti-government street protests, which were temporarily suspended by the outbreak in late December.
This could adversely affect the implementation of fiscal policy, which also faces limitations as public debt moves towards the legal limit, he said.
“We have lowered our GDP growth forecast for 2021 to 2.4% from 3.1% to reflect these lingering uncertainties. We have raised our 2022 forecast to 3% from 2.5% due to this year’s lower base and the likely improvement in the situation, although the domestic outlook remains uncertain,” said Mr Tim.
“We maintain our current account surplus forecast of 3.5% of GDP for this year, as the unclear tourism recovery should balance the lower GDP denominator. We also maintain our fiscal deficit forecast of 4.5% of GDP for fiscal 2021, which will end on Sept 30, as we now expect slower fiscal spending.”
Thailand’s GDP contracted by 6.1% in 2020, compared with a 2.3% growth in 2019, due the pandemic depressing business activity, consumer spending and the tourism industry.
Last year’s 6.1% contraction was the worst full-year performance in 22 years since the 7.6% decline in 1998 as a result of the 1997 Asian financial crisis.
“Thailand sustained its economic rebound in the final quarter of 2020 despite a resurgence of infections, as fiscal stimulus measures partly offset the damage from the pandemic,” said Eric Chiang, associate economist at Moody’s Analytics.
The government is likely to begin easing travel restrictions in the fourth quarter of this year, as half of Thailand’s population should be inoculated by the end of this year, and 75% by the first half of 2022, he said.
“However, downside risks include a delay in the vaccine rollout, a more severe virus outbreak, a delay in tourism recovery and drought,” said Mr Chiang.
Moody’s Analytics expects the economy to expand by 2.8% in 2021, supported by the recovery of the world economy and global trade volume, the government stimulus measures, the rebound of domestic private demand and the unusually low base effect from 2020.
Source: https://www.bangkokpost.com/business/2069371/analysts-predict-shaky-growth