BANGKOK -- Thailand has recorded the slowest economic growth in five years, as a strong Thai baht and the global economic slowdown hurt exports. The kingdom's economic planning agency signified that road ahead will be even rougher.
The Office of the National Economic and Social Development Council on Monday announced that the Thai economy grew by 2.4% in 2019, the slowest pace since 2014, when long-lasting political unrest led to a coup by Prayuth Chan-ocha, who is now prime minister, and brought economic growth down to 1.0%.
A contraction of exports due to the strong baht and the ongoing trade war between the U.S. and China adversely affected the economy. Exports of goods and services fell by 2.6% in 2019 compared to the previous year.
The NESDC predicted the Thai economy to decelerate even further, due to the negative impact on tourism and trade of the new coronavirus, known as COVID-19. The growth rate forecast for 2020 was between 1.5% and 2.5%. Delays in dispersing the national budget could also be a headwind for the economy, it said.
"The Thai economy could grow at 1.5% in 2020 if the coronavirus epidemic lasts until June. It could grow at 2.5% if the situation is contained by April," said NESDC Deputy Secretary-General Wichayayuth Boonchit.
The agency calculated the impact of the epidemic using a model created based on Thailand's experience dealing with severe acute respiratory syndrome, or SARS, in 2013. The model showed that economic growth may fall below 1.5% if the epidemic lasts longer than the agency expects.
The prediction is in line with weakening outlooks provided by other economic authorities. On Thursday, Don Nakornthab, senior director of the economic and policy department of the Bank of Thailand, said the kingdom's economy could grow less than 2%.
Thai economy grew by 1.6% in the three months ending December, compared to the same quarter the previous year.
"Thailand's economy was in a poor state even before the coronavirus hit," Capital Economics wrote in a note after the data was published.
"With tourist arrivals collapsing and the disruption from factory closures in China likely to mount, Thailand's economy is set to contract sharply in Q1." The decline in tourist arrivals due to the coronavirus outbreak, the slowdown of the Chinese economy and disruption from factory closures in China are likely to be the cause of the contraction, according to the report.
Capital Economics estimates the Thai economy will expand at a much slower pace of 1.0% this year.