BANGKOK: Thailand's economy is still expected to grow 1% this year due to the impact of a coronavirus outbreak, but growth is expected to accelerate to 3.9% next year, driven by a recovery in service sector activity, the World Bank said on Tuesday.

Southeast Asia's second-biggest economy shrank 6.1% last year, with the vital tourism sector still struggling. Thailand reopened more broadly to vaccinated foreign visitors in November and eased strict curbs as new infections decline.

"A major surge in COVID-19 cases severely slowed economic activity in Thailand during Q3 of 2021, but a recovery is now underway," the World Bank said in its latest Thailand Economic Monitor.

Economic activity is expected to return to pre-pandemic levels by the end of 2022, with progress on vaccinations and a resumption of tourist arrivals providing support, it said.

While the number of foreign tourists is expected to be negligible this year, it is projected to rise to almost 7 million in 2022 and to around 20 million in 2023 - albeit still half of the 2019 level, the World Bank said.

In late September, it forecast only 1.7 million foreign tourists next year with economic growth of 3.6%.

Monetary policy is expected to remain accommodative to support the recovery, with the policy interest rate unchanged at a record low of 0.50% in 2022, it said, adding Thailand, with its strong external position, was relatively less exposed to policy normalisation by the United States.

Risks to growth, however, are skewed to the downside due to uncertain variables, the World Bank said, adding digital technology had the potential to support Thailand's recovery and ensure a more competitive economy over the longer term.