Thailand’s economy could take as long as two years to return to pre-pandemic output, says World Bank economist Arvind Nair.
“It’s not how low you go, but how quickly you return to where you were before,” he said yesterday at an online seminar entitled “Thailand in the Time of Covid-19”. “We expect a two-year recovery to return to normal economic output, but not necessarily growth.”
Thailand was among the worst-hit economies in the region, Mr. Nair said, because trade and international tourism, two of the biggest contributors to its GDP, were hit particularly hard by the crisis.
He said Thailand entered the crisis with adequate fiscal space as it was comfortably within the recommended debt-to-GDP ratio and had a solid reputation for economic and fiscal management.
However, the country must effectively spend its liquidity to adequately protect vulnerable families from the worst outcomes of the economic downturn, said Mr. Nair.
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The World Bank estimates 8.3 million workers in Thailand have been affected by the crisis and the middle class has shrunk from 50.6% of all households to 38.4% in the first half of 2020. Over this same period, the number of “less than financially secure” households doubled from 7.4% to 15.7%.
He said Thailand should continue to invest in large infrastructure projects such as the Eastern Economic Corridor to spur economic growth and reduce unemployment. But it should also reform the system for public investment, making it more transparent and streamline each step in the process.
According to World Bank economist Francesca Lamanna, countries with strong social assistance programs and social registries were more easily able to scale up public assistance during the pandemic.
“What would be important going forward for Thailand is to invest in a social registry with information on the population most in need so there can be a stronger backbone for social intervention,” she said.
“Countries also need to develop a stable financing scheme for social protection to sustain and finance all these programs needed at the moment.”