FPO: Indications of GDP shrink diminishing in Q3

FPO: Indications of GDP shrink diminishing in Q3

Recovery momentum spotted in key areas

A cargo vessel loaded with containers is docked at Laem  Chabang port in Chon Buri province.
A cargo vessel loaded with containers is docked at Laem Chabang port in Chon Buri province.

Economic recovery momentum during July and August suggests the economy could contract less in the third quarter than the previous period, says the Fiscal Policy Office (FPO).

Although economic conditions in August were still sluggish, the recovery momentum continued based on several economic indicators, said FPO adviser Wuttipong Jittungsakul.

Private consumption improved through a lower contraction of value-added tax collection, which declined by 3.8% year-on-year compared with July's 11.6% contraction.

Private investment also improved, reflected in a 0.5% year-on-year decline in commercial car sales from July's 15.4% contraction.

Merchandise exports contracted at a lower pace in August, by 7.9% year-on-year in US dollar terms against July's 11.4% decline.

Thai exports seeing continuous growth include premium rice, palm oil, canned tuna, frozen pork, food seasonings and pet food, said Mr Wuttipong.

The economy contracted the most in more than two decades in the second quarter, deepening its recession as the nation's key drivers of trade and tourism remain hobbled by the global pandemic.

GDP shrank 12.2% year-on-year in the second quarter, its biggest decline since the Asian financial crisis in 1998, and 9.7% quarter-on-quarter on a seasonally adjusted basis, according to the National Economic and Social Development Council.

The FPO forecasts the economy to contract 8.5% this year, with growth next year of 4-5%.

The number of foreign tourist arrivals is important to determine Thailand's economic growth because that industry contributes 11.5% to the country's GDP, he said.

Tourist arrivals and spending saw a year-on-year slide of about 70% in the first seven months as four months of border closures took a bite out of Thailand's struggling economy, Reuters reported.

From January to July, foreign tourist numbers were 6.69 million, down 71% year-on-year, with spending down 70.4% from a year earlier to 332 billion baht.

Thailand, which had a record 39.8 million tourist arrivals last year, has recorded zero foreign visitors since April when a travel ban was imposed.

The FPO estimates full-year foreign tourist arrivals will total 6-8 million.

The Centre for Covid-19 Situation Administration chaired by Prime Minister Prayut Chan-o-cha approved on Monday special tourist visas for foreign tourists, starting from October.

After the panel endorses the measures, the cabinet is likely to approve them today.

Tourists seeking to visit Thailand for both the short and long term may also enter. Foreigners wanting to stay for 60 days may seek a 30-day extension, but they must show bank statements with deposits over the past six months of at least 500,000 baht or equivalent.

Do you like the content of this article?