World Bank has slashed Thailand’s gross domestic product (GDP) projection for 2021 to just 1%, from 2.2% originally forecast, due to the impacts of the COVID-19 pandemic, said Mr. Kiatipong Ariyapratya, senior economist at the World Bank’s regional office in Thailand.

He added, however, that Thailand’s economy may rebound and the growth rate may increase to 3.6% in 2023, which is equivalent to the rate before the pandemic, one year later than earlier projected, due to mass vaccinations and improvements in the COVID-19 situation.

He noted that the pandemic has had widespread economic impacts on household debt, unemployment and businesses, especially small and medium-sized enterprises, adding that the number of people under the poverty line has increased by 170,000, compared to last year.

On tourism, Mr. Kiatipong said that the sector has not recovered yet, although tourist arrivals are picking up, thanks to the “sandbox” scheme, but the numbers are still small, with a prediction that only 160,000 foreign tourists will have visited Thailand by the end of this year.

He also said that the tourism sector will further improve next year and the number of foreign arrivals may reach 1.6 million, thanks to the mass vaccinations and improving COVID-19 situation.

The export sector remains the main driving force of the Thai economy, especially electronic products and farm produce, which are showing an impressive recovery, particularly in China, said the senior economist, as he warned of possible risk factors in Thailand’s main trading partners, such as logistics bottlenecks and the COVID pandemic.

Regarding the Thai government’s recent decision to raise the public debt ceiling to 70% of GDP, from 60%, he said that the decision is a good short-term move which will help boost economic recovery and the ceiling can be adjusted back down to 60% or lower in the future, when the economy has improved.

He said that most public sector debt in Thailand is domestic borrowing and, hence, the risk is relatively lower compared to external debts.

He warned, however, that spending on public sector borrowing, investments and all the funding for stimulus packages to help people affected by the pandemic must be transparent and targeted at those who need help the most.