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Thai Economy Shrinks Most in 22 Years During 2Q

A solitary tuk-tuk driver scans an empty Sukhumvit Road in Bangkok for customers. (Photo: Bangkok Herald)

Thailand saw its economy shrink the most in 22 years in the April-June quarter, with gross domestic product plunging 12.2 percent, sending the kingdom deeper into a recession that began late last year.

The Office of the National Economic and Social Development Council said it was the largest quarterly downturn since the kingdom recorded a 12.5 percent contraction during the Asian Financial Crisis.

On a seasonally-adjusted basis, the economy shrank by 9.7 percent in the second quarter. That followed a 2.5 percent shrinkage in the first quarter and a 0.3 percent slide in the last quarter of 2019, confirming Thailand is now in a recession that could take two years to emerge from.

Economists consider two consecutive quarters of GDP contraction a recession.

The steep drop in GDP was expected, with government officials saying the economy “bottomed out” in the quarter and is now on the upturn.

Most of the economy was shut down in the April-May with shopping malls, restaurants and small businesses reopening by the middle of May.

Exports shrank by 28.3% compared with the same period last year, as spending by nonresidents, including tourists, is counted as the export of services. Tourism revenue was zero as the airports were closed to commercial flights.

Private investment fell 15 percent as companies halted or postponed investment as demand plummeted. Private consumption contracted 6.6 percent because of business lockdowns and the nighttime curfew.

Forecasts for Thailand’s full-year economic slide range from terrible to historically bad.

The Office of the National Economic and Social Development Council predicts a yearly GDP contraction of 7.3-7.8 percent. The Joint Standing Committee on Commerce Industry and Banking last week forecast that GDP would contract 8.5 percent this year while the University of the Thai Chamber of Commerce predicted a historic 11.5 percent full-year shrinkage.

The worst year for Thai economy was in 1998, when it recorded a 7.6 percent contraction due to the Asian Financial Crisis.