By Devayani Sathyan
BENGALURU (Reuters) – Thailand’s economy likely lurched back into contraction last quarter, stalling a nascent recovery as tough restrictions to contain the spread of COVID-19 hit consumption and an already ailing tourism sector, a Reuters poll found.
After emerging in the second quarter from the worst recession since the Asian financial crisis of 1998, Southeast Asia’s second largest economy shrank 0.8% in July-September from a year earlier, according to the median forecast of 13 economists polled.
On a quarterly basis, gross domestic product (GDP) likely contracted a seasonally-adjusted 2.5% during the same period after growing just 0.4% in the previous quarter.
The GDP data is due to be released on Nov. 15.
Forecasts for the quarterly seasonally adjusted contraction ranged from 1.5% to 4.3%.
“Third quarter GDP figures…are likely to make for ugly reading,” noted Gareth Leather, senior Asia economist at Capital Economics.
“With the tourism sector still struggling despite the recent reopening of the border, the economy is in for a slow recovery. Our forecast is that GDP will not return to its pre-crisis level until the middle of next year.”
To help its vital tourism sector, Thailand earlier this month allowed vaccinated visitors https://www.reuters.com/business/aerospace-defense/bangkok-welcomes-first-tourists-quarantine-free-holiday-2021-11-01/#:~:text=BANGKOK%2C%20Nov%201%20(Reuters),visitors%20vaccinated%20against%20COVID-19 in to Bangkok without quarantine requirements.
But with only a fraction of foreign tourists expected this year compared with pre-COVID-19 levels, the economic recovery from the pandemic-driven slump will be slow.
Last month the government cut https://www.reuters.com/article/testh-thailand-economy-testh-idUKKBN2HI0I0 its 2021 economic growth forecast to 1.0% from a previously projected 1.3%, making the fourth downward revision this year.
Thailand’s central bank https://www.reuters.com/world/asia-pacific/thailand-cbank-sit-tight-rates-awaiting-recovery-hard-hit-tourism-2021-11-08/#:~:text=BENGALURU%2C%20Nov%208%20(Reuters),tourists%2C%20a%20Reuters%20poll%20showed is expected to hold interest rates at a record low of 0.50% until at least 2023, according to a separate Reuters poll published on Monday.
“Despite a strong performance from the export sector, the overall economy was severely affected by the lockdown measures and poor sentiment regarding the government’s handling of vaccine procurement,” said Phacharaphot Nuntramas, chief economist at Krung Thai Bank.
“The dire situation, however, rallied government action, resulting in vastly improved vaccine availability, the passage of the additional fiscal spending and the opening up of the country to foreign tourists. Whether all these urgencies are enough to prevent technical recession in 2H 2021 is yet to be seen.”
(Reporting by Devayani Sathyan; Polling by Vivek Mishra, Md Manzer Hussain; Editing by Ross Finley)
