BANGKOK – The Thai economy shrank at its fastest pace in more than two decades due to a lack of tourists and exports due to COVID-19, according to data released Monday by the government’s economic planning agency.
According to the Bureau of the National Council for Economic and Social Development, real gross domestic product contracted 6.1% in 2020 compared to the previous year.
This was the third year that Southeast Asia’s second largest economy has shrunk in recent times. The economy contracted by 0.7% in 2009 as a result of the global financial crisis and by 7.6% in 1998 during the Asian financial crisis.
The kingdom reported a 4.2% decline in GDP for the quarter ended December compared to the same period in 2019. On a seasonally adjusted quarter-on-quarter basis, the economy grew 1.3% over the three months , after growing 6.5% for the quarter. ending in September.
A technical recovery is defined as two consecutive quarters of seasonally adjusted economic growth.
Exports caused a great deal of economic damage. Exports of services, including expenditures of non-residents such as tourists, decreased by 60.0% in 2020 compared to 2019. Thailand’s borders remain closed to most tourists. Goods exports were also weak, down 5.8% due to slow global demand.
Private consumption expenditure fell 1.0% year-on-year in 2020. Business disruptions imposed by local governments to contain the first wave of the virus also weighed on the results. The central government tried to support consumption by introducing travel subsidies and cash giveaways, but domestic demand was not strong enough to drive the economy out of negative territory.
Since mid-December, Thailand has seen an increase in the number of coronavirus cases, requiring a re-introduction of company locks in certain provinces. With some lockdowns still in effect, government organizations and private research companies are downgrading their economic projections for 2021.
The office of the National Council for Economic and Social Development was no exception. It announced on Monday that it had revised its forecast down to 2.5-3.5% growth. In November 2020, the agency saw the Thai economy grow between 3.5% and 4.5% in 2021.