Thai economy shrinks 12% in 2Q, worst decline in 22 years

Thailand has reported its economy contracted at a 12.2% annual rate in the April-June quarter, its sharpest downturn since the Asian financial crisis of the late 1990s

BANGKOK -- Thailand's economy contracted at a 12.2% annual rate in the April-June quarter, its sharpest downturn since the Asian financial crisis of the late 1990s.

The economy shrank 2% in the first quarter of the year, said the report Monday by the National Economic and Social Development Council.

It showed investment, consumer spending and trade all contracted. Farm output, also hurt by a drought, fell 3% while manufacturing declined 14.4%.

Thailand’s leaders are meanwhile grappling with a wave of student unrest.

Anti-government protesters gathered in large numbers in Thailand’s capital on Sunday for a rally that suggested their movement’s strength may extend beyond the college campuses where it had blossomed.

While those grievances do not mention the economy, the demonstrations underscore public discontent with how the military-dominated government has handled the pandemic crisis, leaving many people struggling to feed themselves.

The government imposed strict controls on activity at the height of the coronavirus outbreak in the spring, including overnight curfews and bans on sales of alcohol. That appears to have kept infections under control: confirmed cases totaled 3,377 as of Monday, according to a tally kept by Johns Hopkins University. There have been 58 deaths.

But the containment has come at a steep cost: the loss of millions of jobs and livelihoods for the many Thai's who depend on foreign tourism.

Exports plunged 28% from a year earlier, while service exports, which include international travel, cratered by nearly 38%.

“The worst of the economic slump brought on by COVID-19 might be over. But with exports and tourism still missing in action, the negative GDP growth trend is here to stay for the rest of the year, and perhaps well into 2021," ING Economics said in a commentary.

ING economist Prakash Sakpal forecast a 6.6% annual contraction for the whole year, with the GDP shrinking 7.6% in the current quarter and 4.8% in the last quarter of the year.

On a seasonally adjusted, quarterly basis, the Thai economy contracted 9.7% in April-June from the previous quarter, when it shrank 2.5%. It also logged a contraction in the last quarter of 2019, minus 0.3%, and thus has been in recession this year.

The economy is faring about as poorly as those of Thailand's neighbors. Last week, Malaysia reported a 13.2% contraction in its economy in the last quarter. Singapore's economy shrank 13.2% and the Philippines' 16.5%.

For most, it has been the worst downturn since the Asian financial crisis struck with the collapse of the Thai baht in July 1997.