The Bank of Thailand has slashed its economic growth forecast this year to 3 percent from 3.2 percent made in December, given the impact of the second wave of COVID-19 infections and tepid tourism.

With tourism contributing up to 12 percent of GDP, Thailand's economic recovery is on a slower pace than other countries that rely less on tourism. (Photo: VNA)

Titanun Mallikamas, secretary of the central bank's Monetary Policy Committee (MPC), said the second wave of infections that emerged in December resulted in a sharp drop in foreign tourist arrivals. The bank trimmed its projection for foreign arrivals this year to only 3 million from 5.5 million.

Last year, Thailand received 6.7 million foreign tourist arrivals and earned around 300 billion baht (9.66 billion USD) in tourism revenue. The figures are far below 40 million tourist arrivals and 2 trillion baht reported in 2019.

With tourism contributing up to 12 percent of GDP, Thailand's economic recovery is on a slower pace than other countries that rely less on tourism, he said.

A significant decline in overseas travellers is expected to take a heavy toll on GDP in the first quarter this year, said Titanun.

In 2020, Thailand’s economy shrank 6.1 percent, compared with growth of 2.3 percent in 2019. Last year's 6.1 percent contraction was the worst full-year performance in 22 years since the 7.6 percent decline in 1998 as a result of the Asian financial crisis.

The Bank of Thailand forecasts the economy will take around 2.5 years to recover to the same level as before the pandemic.

Despite the downgrade on growth this year, the central bank predicted the Thai economy would expand by 4.7 percent in 2022, mainly supported by a fast recovery in merchandise exports, in line with the expansion of trading partner economies as well as stimulus measures recently announced.

Amid the global economic recovery, the Bank of Thailand upgraded its export growth outlook to 10 percent this year from 5.7 percent earlier. The improving economic momentum of trading partners is the key factor supporting export growth, Titanun said.

He said the MPC on March 24 voted unanimously to maintain the policy rate at 0.5 percent for a seventh straight meeting, aiming to support an economic recovery that remains highly uncertain.

Source: VNA