Economy shrinks for first time since 2014 on virus

Economy shrinks for first time since 2014 on virus

An employee wearing a face mask under a protective face shield cleans tables at the food court of a partially closed shopping mall on May 11, 2020. (AFP photo)
An employee wearing a face mask under a protective face shield cleans tables at the food court of a partially closed shopping mall on May 11, 2020. (AFP photo)

The country’s economy contracted in the first quarter for the first time since 2014 as the coronavirus outbreak cut off tourist arrivals and shuttered commerce.

Gross domestic product shrank 1.8% from a year ago, the National Economic and Social Development Council (NESDC) said on Monday. That’s the first contraction since early 2014, according to previously published data. The median estimate in a Bloomberg survey of economists was for GDP to shrink 3.9% last quarter.

On a quarterly basis, the economy shrank a seasonally adjusted 2.2%.

The state planning agency, reporting January-March data on Monday, slashed its forecast for 2020 gross domestic product (GDP) to a contraction of 5.0-6.0% from growth of 1.5%-2.5% projected in February.

That would be the worst decline since 1998 when the Asian financial crisis damaged the economy.

The agency also cut its projection for this year's exports and foreign tourist numbers, the main drivers of Thai growth.

The agency revised October-December's quarterly GDP to a 0.2 contraction from 0.2% growth, meaning the economy slipped into a technical recession.

The economy will be hit the hardest in the second quarter by lockdowns, before gradually recovering, NESDC Secretary General  Thosaporn Sirisumphand told a news briefing.

Most economists expect the central bank to cut its key interest rate by 25 basis points to 0.5% when it meets on Wednesday.

Thailand’s economy is heavily reliant on tourism and trade, both of which have taken a severe knock as countries around the world imposed restrictions to contain the coronavirus outbreak. Official data shows a 74.6% plunge in foreign tourist arrivals in March from a year ago.

The government has stepped in with a stimulus package worth about 15% of GDP to help cushion the economy, which it expects will contract 5%-6% this year.

Some lockdown restrictions were eased this weekend, with shopping malls and retail businesses reopening.

Video: Chatuchak back in business


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