A deserted lounge at the Suvarnabhumi airport in Thailand's Bangkok amid COVID-19Thailand's economy could contract by as much as 10.4 percent this year as trade and tourism are severely dampened by COVID-19, with the ongoing drought and floods adding to the woes, said the World Bank (WB).
The dismal figure is a projection of the worst scenario, and it will take at least three years for the country's GDP to recover to pre-pandemic levels, said the WB’s senior country economist Kiatipong Ariyapruchya.
If this becomes true, it will be the worst economic contraction for Southeast Asia's second-largest economy based on available data, much worse than the dip of 7.6 percent in 1998 after the 1997 Asian financial crisis.
Policy continuity is a factor affecting investor confidence, as there have been several changes in the government's economic team, while resurging political protests add to the downside risk, Kiatipong said.
Thailand's full-year economic contraction is forecast at 8.3 percent this year in the base scenario, down from a 5 percent decline projected previously, the global lender said.
The base projection is in line with the Thai Fiscal Policy Office's 8.5 percent contraction forecast but is more pessimistic than the 7.6 percent contraction anticipated by the Bank of Thailand.
The 8.3 percent contraction is well below the country's potential growth of 2.5-3 percent and is among the sharpest projected declines in East Asia, according to the WB.
A resurgence ofCOVID-19infections in Thailand and globally is a key downside risk, which can hurt demand forThailand's exports and impact domestic economic activity, the WB said./