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Economy

Thailand GDP shrinks at fastest pace in over 2 decades

Economy contracts 6.1% in 2020 due to lack of tourists and exports

People shop for street food in Chinatown in Bangkok amid the pandemic on Jan. 6.   © Reuters

BANGKOK -- Thailand's economy contracted at its fastest pace in more than two decades, reflecting a lack of tourists and exports due to COVID-19, according to data released on Monday by the government's economic planning agency.

Real gross domestic product shrank 6.1% in 2020 compared with the previous year, according to the Office of the National Economic and Social Development Council.

This was the third year that Southeast Asia's second-largest economy has contracted in recent times. The economy shrank 0.7% in 2009 due to the global financial crisis and 7.6% in 1998 amid the Asian financial crisis.

The kingdom reported a 4.2% GDP decline for the quarter ending December compared with the same period in 2019. On a seasonally adjusted quarter-to-quarter basis, the economy grew by 1.3% for the three months, following 6.5% growth for the quarter ending September.

A technical recovery is defined as two consecutive quarters of seasonally adjusted economic growth.

Exports accounted for a large portion of the economic damage. Service exports, which include spending by nonresidents such as tourists, slumped 60.0% in 2020 compared to 2019. Thailand's borders remain shut to most tourists. Exports of goods were also weak, recording a 5.8% drop due to slow global demand.

Private consumption expenditures fell 1.0% on the year in 2020. Business lockdowns imposed by local governments to control the first wave of the virus also weighed on results. The central government tried to support consumption by introducing travel subsidies and cash giveaways, but domestic demand was not strong enough to push the economy out of negative territory.

Since mid-December, Thailand has seen coronavirus cases surge, forcing the reimposition of business lockdowns in certain provinces. With some lockdowns still in place, government organizations and private research companies are revising down their economic projections for 2021.

The Office of the National Economic and Social Development Council was no exception. It announced on Monday that it had revised down its forecast to 2.5-3.5% growth. In November 2020, the agency saw the Thai economy to grow in 2021 at between 3.5% and 4.5%.

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