The economy is expected to recover in 2022, growing 2.8-3.7%, depending mostly on the severity of the Omicron variant, according to Kasikorn Research Center (K-Research).
The research house said the global and Thai economies are once more beset by increased uncertainty after the detection of the new Omicron variant. No clear data on the new strain's transmission rate and its threat to the efficacy of coronavirus vaccines is presently available.
However, travel restrictions imposed by many countries may hinder Thailand's economic recovery in 2022, especially in the first quarter.
Nattaporn Triratanasirikul, K-Research deputy managing director, said more stringent travel restrictions and hygiene measures adopted by various countries, including border closures, reflect global anxiety regarding the severity of the new coronavirus variant, though no clear findings from studies of the new strain are yet available.
Ms Nattaporn said the impact of Omicron's spread to the Thai economy depends on the new variant's transmission rate, its threat to the efficacy of vaccines and the severity of the disease.
K-Research projected two scenarios assuming the spread of the Omicron strain would subside by the end of the first quarter 2022 and the government would not tap additional off-budget borrowing. It assumed the government would spend the remaining 260 billion baht under the second emergency loan decree, which authorised the government to borrow up to 500 billion.
In the base case, if the Omicron variant spreads rapidly but proves less severe than the Delta strain, and the Covid-19 vaccines now available are effective in curbing severe illness, Thailand may not be required to reimpose lockdown measures.
Under this scenario, the 2022 Thai economy may remain on a recovery path and grow 3.7%, supported by exports, a rebound in household spending and improved tourism by the end of 2022.
Yet inflationary pressures would still pose a risk to the economy, she said.
In the worst-case scenario, Thailand's economic growth is projected to tally only 2.8% in 2022. This projection assumes the impact of the Omicron variant proves as severe as that of the Delta variant, and the efficacy of existing vaccines drops substantially, prompting the government to reimpose containment measures such as banning entry of foreign visitors and reinstating lockdown measures in accordance with the risk level in each location.
Ms Nattaporn said K-Research gives the most weight to the base case.
Kevalin Wangpichayasuk, another K-Research deputy managing director, said with regard to the potential impact of the Omicron variant on tourism, the base-case scenario estimates the number of international arrivals at roughly 4 million during 2022, against the 350,000 projected for 2021.
She said in the worst-case scenario, the number of foreign visitors would be expected to fall to around 2 million. The loss of every 1 million foreign arrivals would shave Thailand's tourism income by roughly 70-80 billion baht, said Ms Kevalin.
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