Thailand GDP Contracts Most Since 1998

As the coronavirus pandemic shattered tourism, exports and domestic spending, Thailand’s economy contracted the most since the Asian financial crisis in 1998.

Gross domestic product fell 12.2 percent on a yearly basis in the second quarter, after easing by revised 2 percent in the first quarter, data from the National Economic and Social Development Council, or NESDC, showed on Monday.

However, this was slower than the economists’ forecast of -13.3 percent.

The economy previously registered double-digit contractions in the second and third quarters of 1998, when GDP was down by 11.2 percent and 10.1 percent, respectively.

On a quarterly basis, GDP declined 9.7 percent in the second quarter versus a 2.5 percent drop in the preceding period. GDP was expected to fall 11.4 percent.

The government lowered its full-year GDP forecast for 2020 to -7.3 percent to -7.8 percent compared to an earlier projection of a -5 percent to -6 percent.

The drop in Thai GDP last quarter was not as huge as some other economies in the region, but Thailand’s dependence on tourism will weigh on the recovery in the quarters ahead and means the economic outlook is still one of the worst in the region, Alex Holmes, an economist at Capital Economics, said.

On the expenditure side, data showed that private final consumption expenditure declined 6.6 percent, while government spending grew 1.4 percent. Gross fixed capital formation decreased 8 percent.

For external demands, exports and imports of goods and services decreased in the second quarter. Goods and services balance showed a surplus of THB 123.6 billion.

On the production side, the agricultural sector fell 3.2 percent, due mainly to drought conditions.

The non-agricultural sector declined by 12.9 percent, deepening from a fall of 1.3 percent in the first quarter.

Largely due to the decreased number of foreign tourists, together with prevention and control the spread of Covid-19 measure, services output plunged 12.3 percent. Manufacturing shrank 14.4 percent.

On the other hand, construction rebounded strongly in the second quarter, with output expanding 7.4 percent.

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