Thailand’s economy suffered its biggest annual contraction since the 1998 Asian financial crisis in Q-2 due to the fallout of the coronavirus chaos, prompting the government to slash its GDP forecast for the year and announce more stimulus
Data from the state planning agency showed a 100% fall in foreign tourism dealt the biggest blow to Southeast Asia’s 2nd-largest economy, while the coronavirus and measures to curb it also hit consumption, private investment and exports.
New Deputy Prime Minister Supattanapong Punmeechaow told a media conference the government would announce more stimulus this month, “to support the economy and all groups of affected people,” adding these would be discussed at a 19 August meeting.
The data, which also showed a record contraction Q-Q, represents another issue for the government, also facing its biggest anti-government protests since the Y 2014 coup.
Monday’s economic release underscores the collapse of aggregate demand, both externally and internally.
Thailand’s economy is heavily reliant on tourism and exports, shrank 12.2% in Q-2 from a year earlier after a revised 2.0% fall in Q-1. It fell a record 9.7% on the Quarter, on a seasonally adjusted basis.
The National Economic and Social Development Council (NESDC) cut its GDP forecast for the year, expecting the economy to fall 7.3%-7.8% in Y 2020. The economy saw a record annual contraction of 7.6% in Y 1998.
Monday, the NESDC said it expected only 6.7-M foreign tourists to come to Thailand this year after last year’s record 39.8-M and said there were no foreign tourists in Q-2.
Meanwhile, NESDC expected a 10% fall in exports in Y 2020, having previously forecast an 8% decline.
The government has already supported the economy with a $61-B fiscal stimulus package, the central bank has slashed interest rates by 75 bpts this year to a record low of 0.50%.
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