The research house said the tighter restrictions imposed to contain the spread of infections dampen the recovery momentum seen in the first quarter of 2021.
"We expect domestic economic activity to be severely affected by the tighter restrictions imposed to contain the resurgence of Covid-19 infections.
"The recovery of exports of goods will partially cushion the impact of the third wave of Covid-19 infections but it will not be enough to bring Thailand’s economy back to the pre-Covid level. In fact, we expect the economy to remain below the 2018 level,” it said in a research note.
Over the last 24 hours, Thailand recorded 2,473 new Covid-19 cases and 35 fatalities, bringing the total infections in the kingdom to 113,555 and death toll to 649 to-date.
The National Economic and Social Development Council (NESDC) has lowered its 2021 economic growth forecast to 1.5 per cent to 2.5 per cent with the country facing an uphill battle against the third wave of COVID-19.
The Finance Ministry has cut its 2021 GDP growth forecast to 2.3 per cent while Bank of Thailand is predicting that the GDP may grow only between 1.0 and 2.0 per cent this year.
RHB Research foresees exports growth and government spending to remain as key driver for the recovery in the economy this year.
It said exports of goods have seen a sharp rebound recently driven by the electronic exports, agriculture exports and the recovery in the automotive sector.
"We are concerned over the potential disruption on the production of cars amidst the shortage of semiconductor for automotive,” it added.
However, it said it is optimistic that recovery remains intact.
The research house noted that the Thai government has approved its latest economic relief package, valued at 350 billion baht (about RM46 billion) (2.2 per cent of GDP), to support business in the country.
It added that the Bank of Thailand (BoT) has also stepped in and offered added measures on retail loan restructuring as part of its third phase of debt relief for individual borrowers, aiming to soften the impact of the pandemic.
Meanwhile, the research house said tourism industry would remain under pressure for most of 2021 as plan for a gradual reopening of its borders to foreign visitors is jeopardy following fresh wave of outbreak which started in April.
"While the government has insisted that the plan to reopen Phuket to vaccinated visitors in July remains intact, we are concerned over the impact of the slow rollout of vaccination and recent increase in COVID-19 cases.
"Our view is that the uncertainties and lingering impact of COVID-19 will deter the arrivals of foreign tourists,” it said. - Bernama