sheets would reduce potential output over the longer-term. THAILAND Key conditions and The Ukraine-Russia war is likely to have a substantial impact on domestic oil prices challenges and consumer prices as Thailand is a net commodity importer. High consumer Table 1 2021 The economy is on a recovery path fol- prices will weigh on household welfare. As Population, million 70.0 lowing the reopening of borders and re- the economic recovery is expected to be GDP, current US$ billion 506.0 laxation of lockdown measures. Growth is gradual, continued but scaled-down social GDP per capita, current US$ 7233.4 projected to reach 2.9 percent in 2022 after assistance and government relief programs a 6.4 Upper middle-income poverty rate ($5.5) expanding by just 1.6 percent in 2021. are necessary to mitigate the welfare impact a 35.0 However, risks to growth are skewed to of rising prices on household livelihoods. Gini index b 102.2 the downside as several uncertainties School enrollment, primary (% gross) Life expectancy at birth, years b 77.2 cloud the outlook. The global trajectory of Total GHG Emissions (mtCO2e) 392.2 the pandemic remains unpredictable and Source: WDI, Macro Poverty Outlook, and official data. the probability of future new vaccine-re- Recent developments a/ Most recent value (2020), 2011 PPPs. sistant strains of coronavirus could affect b/ WDI for School enrollment (2020); Life expectancy domestic consumption and border restric- The economy expanded by 1.6 percent in (2019). tions. The recovery will in part depend on 2021 as a surge in COVID-19 cases hit eco- continued progress with the vaccination nomic activity. This followed a contraction rollout and booster shots, the ongoing im- of 6.2 percent in 2020 - the worst since the The economy expanded by just 1.6 percent plementation of other preventive and test- Asian Financial Crisis. Private consump- in 2021 as tourism remained dormant and ing/tracing measures, and the sustained re- tion weakened due to the COVID-19 out- a surge in COVID-19 cases hit economic opening of international borders. break and the containment measures in The pandemic shock is expected to inflict 2021. Goods exports were the main source activity. Economic activity is expected to lasting scars on productivity and socioeco- of growth, following the pickup in global return to pre-pandemic levels by early nomic development in Thailand. A decline demand. The economy gained traction in 2023 supported by private consumption in capital investment in 2020 diminished the fourth quarter, growing by 1.9 percent and services exports. The pace of recovery is potential output, exacerbating the adverse (yoy), up from -0.2 percent in the previous effects of demographic aging and slow fac- quarter. Contributing factors included the expected to remain protracted and hinges tor reallocation. Employment and learning relaxation of lockdown measures, the re- on the evolution of COVID-19 infections, losses were uneven with vulnerable groups opening of borders for vaccinated visitors, the resumption of tourism, and the fallout disproportionately affected, worsening in- and continued COVID-19 relief measures. from the Ukraine-Russia war. Goods ex- equalities in income and human capital ac- The central government fiscal deficit ports are likely to be affected by weakening cumulation. Meanwhile, increasing levels widened significantly in FY21 (year ended of corporate and household debt could pose September) to 8.7 percent of GDP due to global demand. Government relief mea- risks, including risks to the financial sector further increases in pandemic-response sures are expected to gradually decline, once existing forbearance measures expire. spending. Expenditures rose to 26.4 per- amid ongoing fiscal consolidation. On the other hand, a deferral of productive cent of GDP, up from 23.5 percent in FY20. investments due to weakened firm balance Public debt increased to 57.8 percent of FIGURE 1 Thailand / Real GDP growth and contributions to FIGURE 2 Thailand / Actual and projected poverty rates and real GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 8 30 180000 6 160000 25 4 140000 2 20 120000 0 100000 15 -2 80000 -4 10 60000 -6 40000 5 20000 -8 2017 2018 2019 2020 2021 2022f 2023f 2024f 0 0 Private consumption Government consumption 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Gross Fixed Investment Net exports International poverty rate Lower middle-income pov. rate Change in inventories* GDP Upper middle-income pov. rate Real GDP pc Sources: World Bank staff calculations and NESDC. Note: * Includes statistical Source: World Bank. Notes: see Table 2. discrepancy. MPO 1 Apr 22 GDP. The central bank continued to pur- peers. The poverty headcount rate (based Ukraine-Russia war. However, second- sue accommodative monetary policy and on the upper middle-income poverty line round inflation pressures are projected to the targeted distribution of liquidity sup- of 5.5 dollars a day, 2011 PPP) was esti- remain contained due to the remaining port to SMEs. The current account balance mated to have declined from 6.4 percent in output gap, price administration, and an- turned negative for the first time in 8 years 2020 to 6.2 percent in 2021 due to signifi- chored inflation expectations. at 2.2 percent of GDP, reflecting the widen- cant fiscal support to households. The pace of recovery will hinge on the ing service exports deficit due to muted evolution of COVID-19 infections and the tourism receipts and soaring freight costs. resumption of tourist arrivals. Despite the The Real Effective Exchange Rate (REER) reopening of borders, the pace of the depreciated by 4.8 percent in 2021, the sec- Outlook tourism recovery is likely to be gradual ond worst-performing currency in Asia af- due to the ongoing Omicron wave, con- ter the Japanese yen. The economy is expected to return to pre- tinued travel restrictions by China, and Employment has picked up following the pandemic levels by early 2023. Growth is the Ukraine–Russia war. relaxation of lockdown measures and the projected to reach 2.9 percent in 2022 and 4.3 Labor market conditions are expected to reopening of borders, but labor market percent in 2023, driven by increased private gradually improve as the tourism sector conditions remained weaker than before consumption and services exports. But continues to recover. Social assistance in- the pandemic. The unemployment rate de- weakening global demand will slow come is expected to rise due to an expan- clined to 1.6 percent in Q4 2021 but re- growth in goods exports. The fallout from sion of eligible beneficiaries of the state mained above the level of 1.0 percent in the Ukraine-Russia war will weigh on do- welfare card scheme from 13.5 million in 2019. Average household income grew 4.5 mestic consumption, external demand, and 2021 to 20 million in 2022. Following the percent per year (in nominal terms) during tourism. Government relief measures are growth rebound, the expansion of the so- 2019 – 2021, driven by incomes from social expected to gradually decline amid fiscal cial assistance programs, and the continu- assistance and COVID-19 relief measures. consolidation. Headline inflation is expect- ation of the COVID-19 recovery programs, Household debt surged during the same ed to rise markedly to 3.7 percent in 2022 household income is expected to increase period, reaching 89.3 percent of GDP in due to supply-side driven factors, including and the poverty headcount rate is project- 2021, which is high compared to regional the surge in global oil prices following the ed to decline to 5.8 percent in 2022. TABLE 2 Thailand / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 2.2 -6.2 1.6 2.9 4.3 5.1 Private Consumption 4.0 -1.0 0.3 3.8 4.1 3.7 Government Consumption 1.6 1.4 3.2 0.9 2.5 2.9 Gross Fixed Capital Investment 2.0 -4.8 3.4 4.0 4.9 3.3 Exports, Goods and Services -3.0 -19.7 10.4 6.7 5.7 7.8 Imports, Goods and Services -5.2 -14.1 17.9 6.5 5.1 5.3 Real GDP growth, at constant factor prices 2.2 -5.6 1.6 2.8 4.3 5.1 Agriculture -0.5 -3.2 1.3 1.3 1.2 1.2 Industry -0.7 -5.3 3.4 4.8 3.9 3.9 Services 4.2 -6.0 0.6 1.9 4.9 6.3 Inflation (Consumer Price Index) 0.7 -0.8 1.2 3.7 0.9 1.1 Current Account Balance (% of GDP) 7.0 4.2 -2.2 -2.4 0.2 2.2 Net Foreign Direct Investment (% of GDP) -1.0 -4.8 0.6 0.5 0.5 0.5 Fiscal Balance (% of GDP) 0.4 -4.5 -7.8 -3.9 -2.2 -2.0 Debt (% of GDP) 40.9 50.1 57.7 62.6 63.2 61.8 Primary Balance (% of GDP) 1.4 -3.6 -6.5 -2.8 -0.9 -0.8 a,b International poverty rate ($1.9 in 2011 PPP) 0.1 0.0 0.0 0.1 0.1 0.1 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 0.3 0.3 0.3 0.3 0.2 0.2 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 6.2 6.4 6.2 5.8 5.3 4.7 GHG emissions growth (mtCO2e) 0.0 -6.0 1.8 -0.7 1.8 3.6 Energy related GHG emissions (% of total) 61.3 59.5 60.1 59.4 59.6 60.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on EAPPOV harmonization, using 2014-SES, 2019-SES, and 2020-SES.Actual data: 2020. Nowcast: 2021. Forecasts are from 2022 to 2024. b/ Projection using annualized elasticity (2014-2019) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 2 Apr 22