Government acknowledges 4% growth target is unlikely

The government admits it will be difficult to reach its economic growth target of 4% this year because of the latest surge of Covid-19 infections.

Deputy Prime Minister Supattanapong Punmeechaow said the fresh wave of infections has doomed the country’s recovery, making it highly unlikely the economy will grow by 4% this year as projected by the government.

He said exports remain a bright spot and the government vows to maintain plans to roll out fresh measures to boost domestic consumption.

Mr Supattanapong said the government also aims to introduce measures to encourage cash-rich depositors to spend more to stimulate domestic consumption.

He said the government is still maintaining a plan to reopen Phuket.

In July, Phuket is expected to be the first province to waive the quarantine requirement for foreign visitors who have been vaccinated against Covid19, as part of the government’s plan to reopen the country.

“The government is working hard to control the spread of Covid-19 infections to create confidence among consumers and businesses, while implementing measures to stimulate the economy,” said Mr Supattanapong.

“Thai economic growth may not reach 4% as hoped, but the government needs to keep on working. There is a little room to reach 4%, and the government will keep attempting to get close to the target.”

He said the government also remains committed to continuing planned infrastructure development and stimulating government expenditure, which are likely the main contributors to the Thai economy this year.

A source from the Finance Ministry who requested anonymity said later this month the Fiscal Policy Office (FPO) is scheduled to reassess its economic growth forecast for 2021.

In January, the FPO slashed the country’s economic growth forecast to 2.8%, down from a forecast of 4.5% made in October 2020.

The economy contracted by 6.5% in 2020.

The lower growth projection was attributed to an expected decrease in foreign tourist arrivals given the 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 in its previous projection.

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% this year against an 8.9% fall last year.

Merchandise exports are set to grow 6.2% this year from a 6.6% contraction in 2020.

“Thailand’s economic growth this year depends largely on the arrival of foreign tourists and the government’s nationwide inoculation plans reaching their targets by September this year,” the source said.