Arkhom predicts two-year GDP recovery

25-Nov-2020 Intellasia | BangkokPost | 6:51 AM Print This Post

Thailand’s economy will take at least two years to recoup the 9 percent of GDP lost to the pandemic crisis, says Finance minister Arkhom Termpittayapaisith.

The economy would have expanded by around 3 percent this year if the pandemic crisis did not erupt, said Arkhom.

The pandemic crisis will make the economy contract by around 6 percent in 2020, therefore there is a 9 percent gap that needs to be recuperated, he said.

If Thailand’s GDP growth could arrive at 4 percent in 2021 and 2022, this would propel the country’s economic growth momentum to return to a normal ratio, said Arkhom.

Compared with Vietnam’s GDP growth of 2.6 percent year-on-year in the third quarter, Arkhom said Vietnam’s GDP is twice as small as Thailand’s GDP, while 12 percent of Thailand’s GDP relies on tourism revenue, much larger than the 4-5 percent of GDP the tourism industry makes up in Vietnam.

Thailand’s GDP contracted by 6.4 percent year-on-year in the third quarter, with full-year economic contraction projected to arrive at 6%, says the National Economic and Social Development Council (NESDC).

The economy was previously anticipated to contract by 7.5 percent this year.

The main reason supporting a lower full-year economic contraction is the NESDC projecting the global economy will contract by 3.5%, an improvement from 4.6%, while global trade is expected to decline 11 percent instead of 12 percent projected previously.

After a seasonal adjustment, the economy expanded by 6.5 percent quarter-on-quarter from the second quarter. In the first nine months, the economy contracted by 6.7%.

The NESDC’s projection does not take into account the impact from political conflicts nor a second wave of outbreaks.

Krisada Chinavicharana, finance permanent secretary, said a quarter-on-quarter GDP growth of 6.5 percent registered in the third quarter showed the economy had already bottomed out in the second quarter, where GDP contracted by 12.1 percent year-on-year.

The Thai economy is expected to recover gradually, with a possibility of vaccine use and the global economic recovery helping to drive forward the recovery impetus in 2021, said Krisada.

Regarding the government’s fiscal space to cushion against an economic crisis under the fiscal 2021 budget, there is 30 percent fiscal space left, accounting for around 980 billion baht worth of capital, which excludes the remaining sum of the 1 trillion-baht loan decree, said Arkhom.

The fiscal 2022 budget, preparation for which will begin in December, is still designed to support economic growth through public investments in infrastructure and energy projects, he said, adding that some projects may rely more on the private sector’s input.


Category: Thailand

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