The Thai economy is recovering but downside risks and uncertainties remain high in the period ahead, says the Bank of Thailand.
The recovery would depend on the new Covid-19 outbreak and containment measures, as well as revival of the foreign tourist trade after global Covid-19 vaccination, BOT assistant governor Titanun Mallikamas said on Wednesday.
The central bank upgraded its economic projection for this year to 6.6 per cent contraction, from the 7.8 per cent contraction predicted in September.
However it downgraded its forecast for next year from 3.6 per cent to 3.2 per cent growth, due to the smaller number of tourist arrivals than projected, he said.
The impact of a prolonged Covid-19 outbreak abroad coupled with the fresh outbreak in Thailand would delay recovery of tourism, he added.
The central bank predicted 6.7 million visitors to Thailand this year, down from 39.7 million in 2019. It forecast just 5.5 million tourist arrivals next year, revising downwards its September projection of 9 million.
The smaller projection is due to new surges of Covid infections in many countries.
Tourism should recover significantly in 2022, assuming wider coverage of vaccination, said the bank. Revival of the tourism sector as a key engine of the Thai economy should drive growth to 4.8 per cent in 2022.
Domestic demand, especially in private consumption, has improved due partly to fiscal stimulus measures and the recovery of economic activities following relaxation of containment measures, the bank said.
It expects private consumption to fall 1.4 per cent this year from 2019, then rebound to 2.8 per cent and 3 per cent in 2021 and 2022 respectively.
Continuity of government measures and policy coordination among government agencies would be critical to support the economic recovery. Fiscal measures must also continue to sustain the economy, said Titanun. In particular, the government should expedite budget disbursement under the recovery plan, he added.