Thailand’s economy suffered its biggest annual contraction since the Asian financial crisis in the second quarter due to the fallout of the coronavirus, prompting the government to slash its GDP forecast for the year and announce more stimulus.
Data from the state planning agency showed a 100 per cent fall in foreign tourism dealt the biggest blow to Southeast Asia’s second-largest economy, while the coronavirus and measures to curb it also hit consumption, private investment and exports.
New Deputy Prime Minister Supattanapong Punmeechaow told a media conference the government would announce more stimulus this month, “to support the economy and all groups of affected people,” adding these would be discussed at a August 19 meeting.
The data, which also showed a record contraction quarter-on-quarter, represents another headache for the government, also facing its biggest anti-government protests since the 2014 coup.
“Today’s economic release underscores the collapse of aggregate demand, both externally and internally,” said Kobsidthi Silpachai, head of capital markets research of Kasikornbank.
“Recovery will be lengthy as the shock to the demand and supply side has been the most severe in living memory.”
Thailand’s economy, which is heavily reliant on tourism and exports, shrank 12.2 per cent in the second quarter from a year earlier after a revised 2.0 per cent fall in the March quarter. It fell a record 9.7 per cent on the quarter, on a seasonally adjusted basis.
Economists in a Reuters poll had forecast the economy would shrink 13.3 per cent year-on-year and fall 11.4 per cent quarter-on-quarter.
The National Economic and Social Development Council (NESDC) cut its gross domestic product forecast for the year, expecting the economy to fall 7.3 per cent-7.8 per cent in 2020, having previously forecast a 5.0 per cent-6.0 per cent slump. The economy saw a record annual contraction of 7.6 per cent in 1998.
While Thailand has lifted most curbs after seeing no local transmission of the coronavirus for over 80 days, its economy continues to suffer from tepid global demand and an ongoing ban on foreign visitor numbers.
On Monday, the NESDC said it expected only 6.7 million foreign tourists to come to Thailand this year after last year’s record 39.8 million and said there were no foreign tourists in the second quarter.
Meanwhile, NESDC expected a 10 per cent fall in exports in 2020, having previously forecast an 8.0 per cent decline.
“A clear economic recovery will take place once there is a vaccine, which we expect in the middle of next year,” NESDC head Thosaporn Sirisumphand told a separate press conference.
The government has already supported the economy with a 1.9 trillion baht ($61 billion) fiscal stimulus package, while the central bank has slashed interest rates by 75 basis points this year to a record low of 0.50 per cent.
The main stock index dropped 0.5 per cent in early afternoon while the baht was little changed.