State monitoring outbreak’s impact

With the fresh outbreak, the economy may grow much less than expected, says Deputy Prime Minister Supattanapong Punmeechaow.

Mr Supattanapong said the government is monitoring the impact of the surge of new infections on the economy in the first quarter.

“I cannot evaluate yet how drastic the effect on the economy will be from the new infections because the situation has yet to be settled,” he said.

“Nevertheless, the fresh wave will definitely affect economic growth in the first quarter.”

Earlier in December, Mr Supattanapong maintained his forecast for economic growth at 4% this year despite a surge of new infections during that period.

He said the government expects the new surge of infections will be shortlived and international arrivals were projected to return to normal in April, after the successful introduction of vaccines in many countries.

The government’s economic policy this year will focus primarily on accelerating the disbursement of fiscal 2021 budget expenditure of 3.2 trillion baht and infrastructure development projects, said Mr Supattanapong.

More infrastructure projects under public-private partnerships should be approved by the government this year, he said.

On Nov 16, the National Economic and Social Development Council (NESDC) reported GDP contracted by 6.4% year-on-year in the third quarter, much improved from -12.1% in the second quarter, the biggest decline since the Asian financial crisis of the late 1990s.

The first-quarter GDP tallied a 2% year-on-year decline as the pandemic started to take its toll on global business activity.

The state planning unit upgraded its full-year economic forecast to a 6% contraction on Nov 16 from a 7.5% decrease on Aug 17.

For 2021, the NESDC forecasts the economy will expand 3.5-4.5%, mainly supported by improvement in domestic demand, a global economic recovery and improved global trade. Other factors supporting the positive outlook include fiscal budget disbursement, economic stimulus measures and a low base from this year. The agency is scheduled to announce the economic results for the fourth quarter on Feb 15.

Mr Supattanapong said he remains optimistic the government can contain infections by March this year.