Thailand‘s tourism-reliant economy could contract in the first quarter from the preceding three months and the corresponding year earlier period due to the impact of a new coronavirus outbreak, the central bank said on Wednesday.
The Southeast Asian country had largely contained the spread of COVID-19 by mid-2020, but a new outbreak that emerged in December slowed domestic activity.
While the economy improved in February as infections subsided, gross domestic product (GDP) in the first quarter might not be as good as the previous quarter and a year earlier, when restrictions were not yet in full swing, said senior director Chayawadee Chai-Anant.
“So, we think it should be negative both year-on-year and Q-on-Q,” she told a briefing.
Private consumption and investment rose in February from the previous month, while annual exports fell slightly.
Inflation is expected to rebound in April after the ending of a government subsidy on utilities and coming off the year’s low base, Chayawadee said.
The economy continues to face a tourism slump after borders were shut in April, though Thailand plans to start reopening this year.
The government intends to waive the need to quarantine from July for visitors vaccinated against COVID-19 on the resort of Phuket. Full reopening will begin in 2022.
The central bank expects the economy to recover in line with reopening plans and sees 3 million foreign tourists this year, most arriving in the fourth quarter, Chayawadee said.
There were 6.7 million tourists last year, compared with nearly 40 million in 2019, who spent 1.91 trillion baht ($61.10 billion).
Southeast Asia’s second-largest economy shrank 6.1% last year, the steepest fall in over two decades, as the pandemic battered tourism.
On Wednesday, Finance minister Arkhom Termpittayapaisith said GDP growth would accelerate from 2023 to 2024, while the government is maintaining its 2021 4% growth target and had no plans to raise the current 7% level of value-added-tax.
The reopening plans should bring in more tourists, he said, and is “a condition for us to see the light” at the end of the tunnel for the economy in 2021 and 2022.