GSB: 3% growth this year likely

State-owned Government Savings Bank (GSB) forecasts the country’s economic expansion may fare better than expected, driven by the reopening to foreign tourists.

GSB president and chief executive Vitai Ratanakorn said 3-3.5% economic growth remains attainable as the government’s plan to reopen the country from July 1 is likely to have a positive impact on the economy, creating growth momentum.

He said the reopening would benefit other businesses related to tourism such as accommodations, restaurants and transport services.

The export sector has also started recovering in line with global demand, said Mr Vitai.

However, the economic recovery may be uneven, with sectors such as healthcare and online delivery services enjoying the greatest benefits, while lowincome earners are left behind, he said.

Earlier in January, the Fiscal Policy Office (FPO) under the Finance Ministry slashed the country’s economic growth forecast to 2.8%, down from 4.5% estimated in October 2020, and compared with a 6.5% contraction in 2020.

The lower growth projection was attributed to an expected decrease in foreign tourist arrivals given a second wave of coronavirus outbreaks since last year.

The FPO forecasts full-year foreign tourist arrivals at 5 million this year, down from 8 million projected previously.

Nonetheless, private consumption is expected to recover to growth of 2.5% this year from a 0.9% contraction in 2020, with private investment rising by 3.4% against an 8.9% fall and merchandise exports growing 6.2% from a 6.6% decline in 2020.

FPO adviser Wuttipong Jittungsakul said late last month the Thai economy in February showed signs of a gradual recovery, in line with higher private investment, as reflected by an expansion of capital goods imports by 18.6% yearon-year and 4% growth of exports excluding gold.

However, overall exports in February contracted by 2.59% to US$20.2 billion year-on-year, due largely to a drop in industrial products and gold shipments.

In the first two months this year, export value contracted by 1.16% to $39.9 billion.

According to Mr Wuttipong, overall consumer and industry sentiment recovered in February, as the consumer confidence index rose to 49.4 (from 47.8 in January) and the Thailand Industry Sentiment Index increased to 85.1 (from 83.5 points in January), following the easing of the second wave of Covid-19 infections and the government vaccination rollout.

The government’s consumption stimulus packages also play a vital part in bumping up consumer spending, he said.