## Five Things to Know About Thailand’s Economy and COVID-19

_IMF News, June 23, 2021_

## Source details

**Canonical URL:** [Five Things to Know About Thailand’s Economy and COVID-19](https://www.imf.org/en/news/articles/2021/06/21/na062121-5-things-to-know-about-thailands-economy-and-covid-19)

## Other formats

- [Markdown version](/en/news/articles/2021/06/21/na062121-5-things-to-know-about-thailands-economy-and-covid-19/index.md)
- [Structured JSON version](/en/news/articles/2021/06/21/na062121-5-things-to-know-about-thailands-economy-and-covid-19/index.json)
- [Bundle manifest](/en/news/articles/2021/06/21/na062121-5-things-to-know-about-thailands-economy-and-covid-19/bundle-manifest.json)

## Bibliographic details
- Authors: Stella Kaendera, Lamin Leigh IMF Asia, Pacific Department June
- Published: June 23, 2021

---

### Economic impact and sectoral effects
- Thailand’s GDP fell by over 6 percent in 2020.
- Thailand’s GDP fell by 6.1 percent in 2020, the largest contraction since the Asian financial crisis.
- The tourism sector accounts for about a fifth of GDP and 20 percent of employment and was especially affected by the cessation of tourist travel.
- Low-skilled workers and informal and migrant workers have been hit hard, particularly women and the youth, who suffered disproportionately from diminished employment opportunities in contact-intensive sectors.
- The financial sector has thus far weathered the pandemic well, but stress has been building up in the small and medium enterprises sector.

### Policy response and immediate outcomes
- Government response included timely and stringent containment measures that flattened the infection curve during most of 2020.
- Policy package elements:
  - Fiscal stimulus amounting to about 10 percent of GDP.
  - Cuts in the policy rate by 75 basis points to its all time low of 0.5 percent.
  - Financial sector measures to buttress the smooth functioning of financial markets and support debtors affected by COVID 19.
  - Fiscal support included health-related spending and assistance to affected households, including those outside the social security system financed by some reprioritization in the fiscal year 2020 budget and an additional borrowing of 1 trillion baht.
- Outcomes and fiscal metrics:
  - The fiscal deficit widened to 4.8 percent of GDP in 2020.
  - Public debt-to-GDP ratio increased to 49.6 percent of GDP in 2020 from 41 percent in 2019.
- The measures helped save lives and livelihoods, supported an initial recovery by restoring confidence, and permitted a pathway to a safe and gradual reopening of activity.

### Near-term outlook and risks
- IMF’s latest annual assessment (Article IV consultation) forecasts Thailand’s economy to grow at 2.6 percent in 2021.
- A surge in COVID‑19 infections in the country and the region since the beginning of the year highlights uncertainty about the path of the pandemic.
- Prospects for a near-term recovery are challenged by an aggressive third wave of the pandemic.
- Key priority: accelerating and ensuring adequate distribution of vaccines is critical to attain herd immunity, put an end to the pandemic and lay the groundwork for a strong recovery.
- This environment calls for flexibility and careful coordination among fiscal, monetary and financial sector policies to adapt to fast changing circumstances.

### Policy recommendations to support recovery
- Fiscal policy should remain at the center of the response; a premature withdrawal of support measures would not be prudent before a recovery is well underway.
- To accelerate the recovery, a more ambitious fiscal expansion is warranted with spending focused on:
  - Scaling up of public investment.
  - Protecting the vulnerable, including through better targeted social transfers.
- As the crisis subsides and the recovery strengthens, initiate a medium-term revenue mobilization strategy to rebuild fiscal buffers and ensure fiscal sustainability.
- Rebuilding fiscal buffers will require additional effort in both revenue generation and expenditure prioritization.
- Provide targeted and more effective financial sector support to hard hit firms and households, complemented with additional monetary accommodation.

### Structural reforms and transformation opportunities
- Thailand’s dependence on contact-intensive sectors and long-standing structural issues, such as high informality, warrant a strong push to adapt the economy to the post-pandemic world.
- Recommended structural priorities:
  - Scale up investment, particularly for digital infrastructure.
  - Improve training and education outcomes.
  - Promote innovation to catalyze the economy’s digital transformation and mitigate long‑term economic damage from the pandemic.
- Tourism sector transformation:
  - Authorities view the crisis as an opportunity to transform tourism from mass and low‑cost to high‑end and low-density tourism, while encouraging domestic tourism.
  - To facilitate a safe reopening for the tourism sector, Thailand added tourism employees as essential workers in the vaccination queue and plans to reopen to international tourists from July 1 under the "Phuket Sandbox" initiative, allowing free movement of fully vaccinated tourists on the island.
- Climate-aligned recovery:
  - Use the crisis to better align development policies with climate objectives to strengthen the recovery and economic resilience.
  - An efficient carbon pricing would encourage a gradual shift to cleaner energy alternatives, reduce greenhouse gas emissions and air pollution, and help in transitioning to a decarbonized economy.

*IMF Asia and Pacific Department, June 23, 2021*

---


## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Read the report](https://www.imf.org/en/Publications/CR/Issues/2021/06/02/Thailand-2021-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-50192)
- [Read the press release](https://www.imf.org/en/News/Articles/2021/06/02/pr21154-thailand-imf-executive-board-concludes-2021-article-iv-consultation)
- [Thailand and the IMF](https://www.imf.org/en/Countries/THA)
- [Tourism in a Post-Pandemic World](https://www.imf.org/en/News/Articles/2021/02/24/na022521-how-to-save-travel-and-tourism-in-a-post-pandemic-world)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2021/06/21/na062121-5-things-to-know-about-thailands-economy-and-covid-19_