Thailand Q1 slump eases, outlook cut as Covid-19 woes linger

Bangkok

THAILAND'S economy shrank in the first quarter as coronavirus outbreaks hurt consumption and tourism but the fall was less than expected, helped by stronger non-agricultural output and exports.

South-east Asia's second-largest economy contracted 2.6 per cent in the March quarter from a year earlier, data from the National Economic and Social Development Council (NESDC) showed on Monday.

On a quarterly basis, gross domestic product (GDP) rose a seasonally adjusted 0.2 per cent in the first quarter, beating the 0.8 per cent drop forecast by economists.

In the final quarter of 2020, the economy shrank 4.2 per cent from a year earlier but expanded a revised 1.1 per cent on the quarter.

The planning agency downgraded its economic growth outlook for a second time this year to 1.5-2.5 per cent from 2.5-3.5 per cent seen three months ago due to the latest wave of infections, the country's biggest so far.

A NEWSLETTER FOR YOU

Friday, 8.30 am

Asean Business

Business insights centering on South-east Asia's fast-growing economies.

Sign Up

The latest outbreak, which started in April and has accounted for more than two-thirds of Thailand's total infections, has crimped domestic activity amid the country's slow vaccine rollout as it was preparing to reopen more broadly to foreign visitors.

Increased exports, a key growth driver, have lent some support, however. The NESDC now expects exports to rise 10.3 per cent this year, rather than increase 5.8 per cent.

But it forecasts just half a million foreign tourists this year, down from an earlier forecast of 3.2 million arrivals. That compared with nearly 40 million foreign visitors in 2019.

The government has supported the economy with various stimulus measures and earlier this month approved an additional relief package worth 255 billion baht (S$10.82 billion) to help people cope with the latest outbreak.

On Monday, Thai authorities reported 9,635 new Covid-19 infections, the highest-single day increase since the pandemic began last year, with 6,853 cases coming from prison clusters alone.

The current wave of the outbreak that started in early April has added 82,219 cases, or about three-quarters of the country's total case count of 111,082, official data showed.

The surge in new cases underscores the need to speed up the vaccination drive that has seen only about 2 per cent of the population inoculated, trailing the pace of countries like Indonesia, Malaysia and Singapore.

Thailand approved Moderna's shots for emergency use last week as it seeks to boost its orders to about 100 million doses to vaccinate about 70 per cent of the adult population by year end.

Although daily cases continue to increase, the government has relaxed some of its restrictions to boost economic activities.

A ban on dine-in services in regions considered high-risk for infections, including Bangkok, has been eased from Monday. But the country still enforces a nationwide mask mandate and a ban on large gatherings.

"There is a big concern about the new Covid-19 wave because our forecast of strong economic recovery in the second half is entirely out of sight," said Kattiya Indaravijaya, chief executive officer of Kasikornbank.

"Tourism is now expected to return to normal level in two to three years from now. Several customers are now experiencing a very bad situation with new curbs and demand slump. Outbreak really makes people cut their spendings," he said. REUTERS, BLOOMBERG