Thailand: GDP seen expanding 0.7% in 2021 – UOB

Economist at UOB Group Barnabas Gan reviews the recently published GDP results in Thailand.

Key Points

“Thailand’s GDP expanded 7.5% y/y (+0.4% q/q sa) in 2Q21, surprising market estimates for a milder growth of 6.6% y/y (-1.1% q/qsa). The uptick in GDP also comes at the heels of a 2.6% y/y contraction in 1Q21, suggesting that while Thailand’s economy remains soft due to COVID-19-related risks, the low base effects in 2Q20 (-12.1% y/y, -9.2% q/q sa) did help shore up some recovery.”

“Notwithstanding the better-than-expected economic performance in 2Q21, the official GDP growth outlook was downgraded due to COVID-19 risks. Thailand’s Office of the National Economic and Social Development Council (NESDC) shaded its full-year growth outlook to a range of between 0.7% and 1.2%, from a previous outlook range of between 1.5% and 2.5%.”

“GDP growth was underpinned by a strong recovery in investor sentiments and trade in 2Q21.”

“Growth outlook for Thailand in 2021 will depend on three key factors: (1) COVID-19 environment, (2) tourism demand and (3) global trade backdrop.”

“In a nutshell, Thailand’s economic prognosis has clearly worsened since the start of 2021. Renewed COVID-19 risks remain to be the key drag to economic performance, considering the negative impact it could have on Thailand’s tourism, labour and domestic consumption… We note that Thailand’s economy continues to be very dependent on both tourism and trade, and any unexpected worsening of COVID-19 infections and/or a slowdown in global trade winds would inject downside risks to Thailand’s growth momentum in 2021… As such, we downgrade our full-year growth to 0.7% in 2021, thus translating into a GDP contraction of 0.6% in 2H21.”