Washington, DC: An International Monetary Fund (IMF) staff team, led by Mr. Lamin Leigh,
held the virtual 2021 Article IV Consultation with Thailand from February
24–March 11. At the conclusion of the discussions, Mr. Leigh issued the
following statement:
“The Thailand economy is showing incipient signs of recovery from the
COVID-19 downturn.
At the onset of the pandemic, ample policy buffers underpinned by the
country’s long-standing tradition of judicious management of the public
finances, enabled the authorities to deploy a multi-pronged policy package
to manage risks from the pandemic and protect households, businesses, and
the financial system.
“The COVID‑19 pandemic has significantly impacted the Thailand economy.
Real GDP growth in 2020 contracted by 6.1 percent. Containment measures
and the sudden stop in tourism flows have depressed activity.
Subsequently, real GDP recovered in both Q3 and Q4 2020 and grew by 6.2
percent and 1.3 percent respectively on a quarter-to-quarter basis.
“The outlook remains challenging.
Growth is projected to reach 2.6 percent in 2021, led by a recovery in
domestic demand. The recovery in tourism is expected to be slow for most of
2021, hinging partly on a successful vaccine deployment and resumption of
global travel. Here, the authorities have taken
important measures to access and distribute the COVID 19 vaccine. Exports
are expected to pick up on a stronger recovery in global demand. Inflation
is forecast to recover somewhat in 2021 staying near the lower bound of the
Bank of Thailand’s 1 to 3 percent target range.
“Against this backdrop, the mission recommends continuing accommodative
policies to support the recovery, reduce scarring, and tackle long‑standing
economic challenges, while avoiding a premature withdrawal of policy
support until the recovery is secured. A fiscal expansion should focus on
protecting the vulnerable through stronger social safety nets and scaling
up of public investment in macro-critical and climate resilient projects.
Once the recovery is firmly underway, a comprehensive consolidation
strategy, including tax reforms and expenditure prioritization, will be
needed to gradually restore pre‑crisis buffers and preserve fiscal
sustainability over the medium term.
“Targeted and more effective financial sector support to hard‑hit firms and
households, complemented with additional monetary easing in a data
dependent manner would also support the recovery. The
authorities stand ready to implement additional financial measures, if
necessary. The exchange rate should remain flexible as a shock absorber to
volatile capital flows while using macroprudential policies to address
possible financial stability risks.
“Structural policies should aim to limit economic scarring from the
pandemic, strengthen the resilience of the economy, and promote
inclusiveness. The pandemic has had a profound impact on the labor market,
particularly in contact‑intensive sectors and active labor market policies
should be introduced in a coordinated fashion across government agencies to
upskill workers dislocated by the pandemic. Coordinated and multi‑pronged
policies are needed to shift to more sustainable tourism models over the
medium term and promote green investment.
“The IMF team exchanged views on recent economic developments and the
outlook with officials in the government, the Bank of Thailand, other
public institutions, and representatives of the private sector. The team
would like to thank the authorities and other interlocutors in Bangkok for
the productive discussions. The IMF’s Executive Board is tentatively
scheduled to discuss the Staff Report in May 2021.”
