Thailand’s GDP growth could drop below the 3.2 percent baseline projection due to lower foreign arrivals amidst uncertainty regarding COVID-19 vaccine efficiency, and reduced fiscal stimulus, according to the latest minute from the Bank of Thailand’s Monetary Policy Committee (MPC).

Siam Square, usually packed with teenagers, is once again vacant during Thailand's latest outbreak. (Photo: Bangkokpost)

The country has been grappling with higher infections since the start of 2021, with stringent restrictions imposed in five provinces to curb the contagion.

The MPC is a seven-member panel under the Bank of Thailand that sets the benchmark interest rate. The committee has been maintaining the 0.5 percent policy interest rate, a historic low, following three rate cuts undertaken early last year to lend support for feeble economic conditions.

Uncertainties surrounding the Covid-19 situation in the near term as well as uncertainties regarding vaccine efficacy and vaccination coverage in Thailand could affect the progress in the admission of foreign tourists and tourism recovery, according to the minutes.

The projected number of foreign tourist arrivals has been revised down following the new outbreak. The central bank forecasts inbound arrivals of foreign tourist arrivals in 2021 will tally at 5.5 million, a decline from an earlier projection of 9 million.

Thailand registered 6.7 million foreign tourist arrivals in the first 11 months of 2020, down 81.4 percent year-on-year.

The Tourism and Sports Ministry reported tourism receipts in the first nine months were valued at 655 billion THB (21.87 billion USD), down 70.6 percent from the same period last year.

Public expenditure, one of the main drivers sustaining Thailand's economy last year, is anticipated to be revised down, driven mainly by the lower-than-expected fiscal year 2021 annual budget and the carryover budget as well as a reduction and postponement of state-owned enterprise investment, according to the minutes.

Meanwhile, fiscal stimulus could be lower than assumed in the baseline projection owing to a delay in disbursement under the post-pandemic economic recovery plan, the phase-out of government measures to stimulate private consumption in the first half of 2021 and the earmarking of funds available under the 1-trillion-baht emergency loan decree, approaching the deadline in the second half of 2021.

Source: VNA