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Thai Q2 GDP seen shrinking 1.4per cent q/q, outlook weak amid COVID

Thai Q2 GDP seen shrinking 1.4per cent q/q, outlook weak amid COVID

FILE PHOTO: A view of the port of Bangkok, Thailand May 26, 2016. REUTERS/Jorge Silva

BANGKOK : Thailand's economy likely grew in April-June from a year earlier but shrank from the previous quarter, a Reuters poll showed, as the country's biggest COVID-19 outbreak to date hit consumption and already weak tourism, slowing a nascent economic recovery.

Southeast Asia's second-largest economy, which is highly dependent on tourism, was expected to have expanded 6.4per cent in the second quarter from a year earlier, due largely to very weak activity levels early last year when the pandemic first hit, according to analysts in the poll.

Gross domestic product (GDP) shrank an annual 2.6per cent in the first quarter of 2021 and tumbled 12.1per cent in the second quarter of 2020.

On a quarterly basis, GDP likely contracted 1.4per cent in the June quarter on a seasonally adjusted basis after growing 0.2per cent in previous quarter, the poll showed.

The latest outbreak, which began in April, has hit economic activity hard, with tighter containment measures extended and expanded at a time when Thailand was preparing to reopen more broadly to foreign visitors.

Thailand could see coronavirus cases double to 45,000 per day by early next month, even with current lockdown measures in place, its COVID-19 taskforce said on Friday.

The economy, quarter-on-quarter, could see "a dip" again in the third quarter before a gradual recovery in the fourth quarter as the restriction are expected to be eased, Bank of Thailand Governor Sethaput Suthiwartnarueput told Reuters on Wednesday.

"But there's a fair amount of uncertainty with that outlook, because it depends on how the COVID situation evolves," he said.

Analysts forecast full-year growth of 1.0per cent in 2021, citing lockdowns and slow vaccinations as major risks. In 2020, the economy shrank 6.1per cent.

In May, the National Economic and Social Development Council, which compiles GDP data, forecast 2021 GDP growth of 1.5-2.5per cent. It will give new projections on Monday.

With the economy weak and fiscal support measures limited by mobility curbs, the BOT may have to "use its ammunition" at its September meeting to help the economy, said Phacharaphot Nuntramas, economist at Krung Thai Bank.

The central bank has kept its key rate at a record low of 0.50per cent since its last cut in May 2020.

(Reporting by Orathai Sriring and additional reporting by Satawasin Staporncharnchai; Editing by Kim Coghill)

Source: Reuters


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