Drop in GDP sends Thailand into recession

(China Daily)
Updated: 2009-05-26 08:15

BANGKOK: Thailand's economy shrank 7.1 percent in the first quarter from a year earlier, battered by a drop in exports and slump in tourism, the government said yesterday.

It was the biggest decline since the 1998, when Thailand was struggling to extricate itself from the Asian financial crisis, according to the Office of National and Economic and Social Development Board.

The contraction, coming after gross domestic product fell 4.2 percent in the fourth quarter, confirms that Southeast Asia's second-biggest economy is in a recession - usually defined by two straight quarterly drops in GDP.

Exports declined 19.9 percent in US dollar terms in the first quarter while imports fell 38.3 percent, the board said.

Thailand's tourism industry, the country's top foreign income earner, is also suffering from the aftershocks of political turmoil, including major street protests and the closing down of an Asian summit by demonstrators in April.

"Although the government has expected it, we are still very concerned," said government spokesman Panithan Wattanayakorn. He said that several stimulus packages were only implemented recently so the first quarter figures may not yet reflect their impact.

In a sign that the slowdown is hitting consumer spending, household expenditures during the quarter dropped 2.6 percent, the first such decrease since 1997.

Investment declined 15.8 percent while government expenditure rose by 2.8 percent.

A bright spot was the agricultural sector, which grew 3.5 percent.

Sompop Manarungsan, an economist at Bangkok's Chulalongkorn University, said Thailand's economy would probably contract 4 to 5 percent this year.

He said the GDP would continue to shrink the next two quarters, then increase by 1-2 percent in the last quarter.

(China Daily 05/26/2009 page17)