The economy contracted at an accelerated pace in March due to Covid-19 measures, with sharp drops reported in almost all areas, according to the Bank of Thailand.
Inflation fell into negative territory for the first time since June 2017, said Don Nakornthab, senior director of the Economic and Policy Department.
Contraction was seen in all sectors, especially tourism (-76.4% year-on-year) and exports (-2.2%).
The only bright spots were imports and public spending, which continued to expand. However, public spending increased because of a delay in the passage of the budget bill earlier.
For tourism, the contraction was seen in all nationality groups, which in turn dealt a heavy blow on the service sector, especially hotels, restaurants and transport, he said.
“The tourism sector shrank sharply after countries restrict international travel. Exports, except for gold, contracted further on the shrinking demand of trading partners and a plunge in oil prices,” said Mr Don.
Exports contracted 2.2% year-on-year last month, but if gold was included, the drop will be as high as 6.5%. The most affected sectors were automotive, machinery and parts, as well as oil-linked products. Some expansion was seen in electronics, processed farm products and electrical appliances.
Imports increased 4.4% year-on-year after a sharp drop in February due to more purchases of raw materials and intermediary products from China, where lockdown eased. Imports of consumer products continued to decline due to fragile economic activity.
Public spending rose because of pent-up reimbursements following a delay in the passage of the budget bill.
Private consumption contracted year-on-year in almost all categories due to lower purchasing power and consumer confidence and higher unemployment.
Overall, economic stability worsened in March, with headline inflation in a negative range for the first time since 2017 due to plummeting energy prices. Core inflation and fresh food inflation, however, remained positive, albeit lower than in February.
Current account surplus narrowed thanks to the 4.4% year-on-year expansion of imports and shrinking tourism income.
The economy will likely shrink in the first quarter and the contraction will accelerate in the second.
“Whether the recovery will be a U- or V-shape depends on how soon and how many tourists return. Easing of lockdown in several countries does not translate into a fast recovery. It will continue to weaken the baht despite the recent appreciation.”
Besides, he said, there is a prevailing concern of a W-shaped recovery, where Covid-19 outbreak recurs.
He added the 1.9-trillion-baht stimulus measures would help cusion the impact.