Economic Outlook for Thailand and Asia Pacific Region 2021

Economic outlook for Thailand and Asia Pacific region 2021

The World Bank has released their latest Asia Pacific Economic Update for October 2020, which shows the strong economic and social impact of COVID-19 across the Far East region.

According to the report’s data, regional growth in 2020 will be 0.9 percent: this is the lowest rate of growth in 50 years and needs to be carefully considered; the forecast for China predicts a level of growth of about 2 percent which is an improvement from the 1 percent estimation in June, however other countries throughout the region will enter into a recession, with an average contraction of about 3.5 percent. The only economies in the Asia Pacific region besides China which are forecasted to achieve growth are Vietnam at an estimated 2.8 percent rate and Myanmar at a 2 percent rate, in contrast the micronations in the Pacific Islands, especially Fiji, are forecasted to suffer a sever contraction in their economies.

There has been a large contraction in the level of economic and industrial activity throughout the region with a drastic reduction in the volume of trade and international travel, particularly affecting countries which heavily rely upon tourism as an important source of their income. This reliance upon tourism for a significant part of national income has been compounded in the poorest countries with a lower infrastructure budget, which have a low level of social protection for their inhabitants. These nations have been severely affected with a resultant increase in 2020 of the population deemed to be below the poverty line by more than 38 million (below the poverty line corresponds to an income of less than 5.5 dollars per day). The most severely

impacted of these nations are the Pacific mico-states of Palau, Micronesia and the Marshall Islands, all of which lie within the American sphere of influence.

Despite a gloomy global economic outlook and the general slowdown of 2020, the Asian Development Bank and the International Monetary Fund (IMF) have both projected a strong rebound for Southeast Asia’s economies in 2021. These projections range from 4.7 percent from the Asian Development Bank, to 6.2 percent according to the IMF World Economic Outlook. The IMF estimates that advanced economies including the US and UK will grow 4.8 percent in 2021.

The World Bank’s estimates for the Asia Pacific region support the IMF and Asian Development Bank predictions, and are also quite positive for the whole region. Beijing’s expected growth rate for next year is 7.9 percent, while the overall development of the other economies in the region will rebound by up to 5.1 percent on average. The top economic performers in the Asia Pacific region in 2021, aside from China, are Malaysia at 6.3 percent, Myanmar at 5.9 percent, Mongolia at 5.6 percent, the Philippines at 5.3percent and Vietnam are all forecasted to grow in 2021.

The Thai economy is expected to resume growth in 2021, which is being foreshadowed by a softer contraction than expected in the manufacturing sector in almost all categories, which aligns with the gradual recovery in the merchandise exports and domestic spending. Although the tourism industry, which contributes approximately 10% of the value of the Thai economy has contracted severely, with no foreign tourist

arriving for the fifth consecutive month in September, this October the very first flight of tourists landed on a flight from China. These tourists who arrived in are the first in a “Special Tourist Visa” programme devised by Thai and Chinese authorities to restore step by step a sector of the economy that welcomed almost 40 million foreign visitors last year. The relaunching of Chinese tourism to Thailand is a welcome boon for the Thai economy. Thailand was one of the top overseas destinations for Chinese tourists in 2019, where they account for by far the largest number of visitors to Thailand by nationality.

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