World Bank said Thailand’s gross domestic product (GDP) would grow 1%, following the severity of a Covid-19 surge in the third quarter while the adoption of digital technologies could support the recovery moving forward.
After being severely hit by a surge of COVID-19 cases in the third quarter of 2021, Thailand’s economic activity has subsequently rebounded and is expected to grow by 1.0 percent this year, according to the World Bank’s latest Thailand Economic Monitor “Living with COVID in a Digital World” published today. Going forward, the adoption of digital technologies has the potential to support Thailand’s recovery from COVID-19 and ensure a more competitive economy over the longer-term.
Economic activity is expected to return to its pre-pandemic levels end-2022, with progress on vaccinations and a resumption of tourist arrivals providing support for the recovery. Growth is projected to accelerate to 3.9 percent in 2022 and 4.3 percent in 2023, driven by a recovery in service sector activity. If the current pace of vaccinations of around 750,000 per day is maintained, and in the absence of a further resurgence of COVID-19, consumer confidence and international tourist confidence is expected to strengthen.
The report emphasizes that further vaccine distribution and policies that continue to protect citizens are the key catalysts for the economy to achieve the pre-COVID output level by the end of 2022.
“The economy is expected to gain momentum in the fourth quarter of 2021, fueled by domestic travel and increased local mobility,” said Kiatipong Ariyapruchya, World Bank Senior Economist for Thailand. “The pace of the recovery will depend on the extent of the pick-up in foreign tourists and domestic consumption.”
Thailand’s poverty rate is estimated to have remained stable at 6.4 percent in 2021, with an estimated 160,000 people falling into poverty since the onset of the pandemic in 2020. However, a recent 2021 World Bank household phone survey indicates that the impact of the pandemic has been particularly severe on vulnerable groups. Overall, over half of the 2,000 respondents were affected by job losses, temporary work stoppage, and reduced number of working hours or reduced pay.
“While scarring from the pandemic shock could be long-lasting, especially in terms of job losses and school closures,” said Birgit Hansl, World Bank Country Manager for Thailand. “Digital-led development can help offset these scarring impacts can ensure that growth is inclusive and equitable.”
Since the pandemic started in March 2020, 30 percent of all digital service consumers in Thailand were new and consumption among internet users was 90 percent, the second highest in the region after Singapore. According to the report, the pandemic has accelerated the adoption of digital technologies in Thailand, in large part as a response to extended mobility restrictions and to keep operations running.
The report recommends that while the government has taken several steps to advance the digital agenda, more can be done to develop digital services and spur the digitalization of businesses. This includes promoting competition and incentivizing interoperability in digital markets, raising the availability of digital and complementary skills, and enhancing access to innovation finance.