BANGKOK – Thailand’s economy has contracted at the fastest pace in two decades, reflecting a lack of tourists and exports due to COVID-19, according to data released Monday by the government’s economic planning agency.
Real gross domestic product decreased by 6.1% in 2020 compared to the previous year, according to the Bureau of the National Council for Economic and Social Development.
This was the third year in which the second largest economy in Southeast Asia has contracted in recent times. The economy declined by 0.7% in 2009 due to the global financial crisis and by 7.6% in 1998 amid the Asian financial crisis.
The kingdom reported a 4.2% drop in GDP for the quarter ended December compared to the same period in 2019. On a seasonally adjusted quarterly basis, the economy grew by 1.3% for the three months after an increase of 6.5% for the respective quarter ending September.
A technical recovery is defined as two consecutive quarters of seasonally adjusted economic growth.
Exports accounted for a large part of the economic damage. Exports of services, which include non-residents’ spending, such as tourism, fell by 60.0% in 2020 compared to 2019. Thailand’s borders remain closed to most tourists. Exports of goods were also weak, falling by 5.8% due to slow global demand.
Expenditure on private consumption fell by 1.0% compared to 2020. Blocking business imposed by local authorities to control the first wave of the virus also influenced the results. The central government tried to support consumption by introducing travel subsidies and cash offers, but domestic demand was not strong enough to push the economy out of negative territory.
Since mid-December, Thailand has seen an increase in coronavirus cases, forcing the re-imposition of a business blockade in some provinces. With some deadlocks still in place, government organizations and private research companies are revising their economic projections for 2021.
The office of the National Council for Economic and Social Development was no exception. He announced on Monday that he revised his forecast to 2.5-3.5%. In November 2020, the agency saw the Thai economy grow between 20% and 4.5% in 2021.