Thailand Economic Monitor, July 2021 : The Road to Recovery
Successive waves of COVID-19 disrupted the Thai economy in the first half of 2021, but their impact was mitigated by recovering global demand and substantial fiscal support. After a second wave of COVID-19 infections began in late 2020, the governm...
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| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/260291626180534793/Thailand-Economic-Monitor-The-Road-to-Recovery http://hdl.handle.net/10986/35945 |
| Summary: | Successive waves of COVID-19 disrupted
the Thai economy in the first half of 2021, but their impact
was mitigated by recovering global demand and substantial
fiscal support. After a second wave of COVID-19 infections
began in late 2020, the government strengthened public
health and social distancing measures to contain the renewed
spread of the virus. The shock of the second wave caused the
economy to contract by -2.6 percent, year-on-year (yoy), in
Q1 2021, following a 6.1 percent drop in GDP in 2020 which
was one of the steepest contractions among Association of
Southeast Asian Nations (ASEAN) member states. While private
investment and manufacturing production recovered to near
pre-COVID levels in the first quarter of 2021, weakness in
the services and agricultural sector persisted. A third wave
of infections that emerged in April 2021 has proven
especially severe, and the number of cases surged to over
3,000 per day in May-June 2021. Strict containment measures
have reduced mobility and negatively affected consumption
and business sentiment. Activity in the tourism sector has
remained negligible, and the outlook is clouded by the
ongoing impact of COVID-19 across the region, the emergence
of new variants, and slow progress on vaccination. However,
rebounding goods exports have provided substantial support
to the Thai economy, driven by recovering global demand for
automotive parts, electronics, machinery, and agricultural
products. Cash transfers, public health initiatives,
economic recovery programs and other forms of fiscal support
have helped shore up private demand while supporting
consumption among vulnerable households and attenuating the
impact of the crisis on poverty. Going forward, government
will need to invest in strengthening the social protection
system. Prior to the pandemic social assistance benefits
were not very generous and often inadequate to protect the
poor. The largest social assistance programs were
categorically targeted, and only recently is poverty
targeting becoming more prominent. In the years to come it
should be a priority to ensure that vulnerable beneficiaries
receive adequate support and given the limited fiscal space
would also require significant investments in effective
targeting. The crisis also further underscores the need to
ensure that the social protection system covers the large
informal sector in Thailand at all times, not only during crises. |
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