Thailand to face setbacks to recovery in Q2: report

THAILAND's gross domestic product (GDP) contracted 2.6 per cent year on year in Q1, performing marginally better than consensus rates, but analysts are not so hopeful this will carry on into the second quarter of the year.

While the economy performed better than expected, a report from Oxford Economics said this may very well be undercut by the spike in coronavirus infections.

The report predicts that Thailand's GDP will grow by a modest 2.8 per cent this year, as prospects in Q2 will be stymied by a third wave of coronavirus infections. This comes as Thailand faces a surge in Covid-19 infections while struggling to roll out vaccine doses fast enough.

The authorities reported 2,302 new cases on Sunday, bringing the total number of cases in this outbreak to more than 80,000. The 24 deaths due to Covid-19 complications reported on May 16 bring the total death toll to 589.

The surge started in April but the number of cases already make up more than two thirds of total infections in the country, triggering another set of social-distancing measures. These restrictions are set to hit business confidence and also household consumption, which contracted 0.4 per cent on the quarter in Q1, coming in 1.2 per cent lower than a year ago, said the report.

Under the new measures, most parts of the country have been classified as Red Zones, which allow non-entertainment businesses to continue operations, but only at reduced capacity.

As the number of infections rise, an increased risk of a stricter nation-wide lockdown threatens to delay the planned opening of key tourist destinations to quarantine-free travel, further destabilising the nation's tourism industry.

Thailand's net exports have, meanwhile, taken a hit. Despite total annual exports rising 8 per cent, this growth was offset by stronger imports, subtracting 8 percentage points from Q1's year-on-year net exports growth.