The Thai economy has suffered its biggest annual economic contraction since the Asian financial crisis of 1997 due to the fallout from the coronavirus. Encourage the government to reduce its GDP forecasts for 2020 and announce more stimulus measures.
Data from the state planning agency showed that a 100% drop in foreign tourism dealt the biggest blow to the Thai economy. While the coronavirus and the measures to curb it have also affected consumption, private investment and exports.
New Deputy Prime Minister Supattanapong Punmeechaow told Reuters the government will announce more stimulus measures this month. Mainly “to support the economy and all groups of people affected,” adding that these would be discussed at a meeting on August 19.
The data, which also showed a record quarter-over-quarter contraction, poses another headache for the government, also facing its biggest anti-government protests since the 2014 coup.
“Today’s economic publication highlights the collapse in aggregate demand, both external and internal,” said Kobsidthi Silpachai, head of capital markets research at Kasikornbank.
“The recovery will be long because the shock to demand and supply was the most severe in living memory.”
Thailand’s economy is contracting
Thailand’s economy, which is heavily dependent on tourism and exports, shrank 12.2% in the second quarter from a year earlier. Especially after a revised 2.0% drop in the March quarter. It fell a record 9.7% in the quarter, on a seasonally adjusted basis.
Reuters economists predict that the Thai economy will contract 13.3% year-on-year and 11.4% quarter-on-quarter.
The National Council for Economic and Social Development (NESDC) has cut its gross domestic product forecast for the year. Expecting the economy to fall from 7.3% to 7.8% in 2020, after previously forecasting a decline of 5% to 6%.
The economy experienced a record annual contraction of 7.6% in 1997.
While Thailand has lifted most of the brakes after seeing no local transmission of the coronavirus for more than 80 days, its economy continues to suffer. More from lukewarm global demand and an ongoing ban on the number of foreign visitors.
On Monday, the NESDC said it expected just 6.7 million foreign tourists to come to Thailand this year. Last year Thailand had a record 39.8 million. The government said there were no foreign tourists in the second quarter.
Meanwhile, the NESDC expected a 10% drop in exports in 2020, after previously forecasting an 8% drop.
“A clear economic recovery will take place once there is a vaccine, which we expect in the middle of next year,” NESDC chief Thosaporn Sirisumphand said at a separate press conference.
The government has already supported the economy with a 1.9 trillion baht ($ 61 billion) fiscal stimulus package. As the central bank cut interest rates by 75 basis points this year to a record low of 0.50%.
The main .SETI stock index fell 0.5% in the early afternoon while the THB = TH baht was little changed.