Thailand’s economy saw its biggest annual contraction in 22 years and a record quarterly fall in the April-to-June period, as the COVID-19 pandemic and restriction measures hit tourism, exports and domestic activity, prompting an outlook downgrade.
Southeast Asia’s second-largest economy, which is heavily reliant on tourism and exports, shrank 12.2 percent in the second quarter from a year earlier, the worst contraction since the Asian financial crisis in 1998, data from the state planning agency showed.
That was better than a 13.3 percent slump seen in a Reuters poll, and compared with a downwardly revised 2 percent fall in the March quarter.
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On a quarterly basis, the economy shrank a seasonally adjusted 9.7 percent, the deepest on record, but better than the 11.4 percent drop forecast by economists.
The National Economic and Social Development Council cut its GDP forecast for this year. It now expects Thailand’s economy to shrink by 7.3 to 7.8 percent, having previously forecast a 5 to 6 percent contraction.
“Today’s economic release underscores the collapse of aggregate demand, both externally and internally,” Kasikornbank PCL capital markets research head Kobsidthi Silpachai said.
“Recovery will be lengthy as the shock to the demand and supply side has been the most severe in living memory,” he said.
While Thailand has lifted most lockdown restrictions after seeing no local transmission of COVID-19 for more than two months, its economy continues to suffer from an ongoing ban on incoming passenger flights and from tepid global demand.
The number of foreign visitors fell to zero in the April-to-June period, and Thailand has also shelved travel bubble plans amid new virus waves.
The planning agency expects only 6.7 million foreign tourists to come to Thailand this year, down 83 percent from last year’s record 39.8 million.
The downturn comes despite government efforts to support the economy with a 1.9 trillion baht (US$61 billion) fiscal stimulus package, while the central bank has also slashed interest rates by 75 basis points so far this year to a record low of 0.50 percent.
The impact of the lockdown and the travel ban is to continue to affect domestic consumption and investment, with anti-government protests adding to the risks, while exports would remain weak due to soft global demand, analysts say.
The state planning agency also cut its forecast for exports this year, expecting them to fall 10 percent versus a previous forecast for an 8 percent decline.
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