BANGKOK -- Thailand's economic contraction slowed in the third quarter as exports and domestic tourism started picking up from the pandemic-induced slump, the kingdom's economic planning agency said Monday.
Real gross domestic product shrank 6.4% on the year for the three months ended September, the Office of the National Economic and Social Development Council reported. GDP had fallen 12.1% the quarter before that -- the most since the second quarter of 1998, which logged a 12.5% contraction due to the Asian financial crisis.
On a seasonally adjusted quarter-to-quarter basis, the economy grew by 6.5% for the three months ended September, following three consecutive quarters of shrinkage until June. A technical recession is defined as two consecutive quarters of seasonally adjusted negative economic growth.
Thailand imposed business lockdowns and shut its borders to foreigners in an effort to contain COVID-19. While its borders remain closed to most tourists, the business lockdowns had been lifted by the start of the third quarter. Government efforts to promote domestic travel by Thais also helped consumption.
Private consumption expenditures fell 0.6% on the year for the third quarter. This marked an improvement from the 6.8% fall recorded for the second quarter. Accommodation and food service activities, which contracted by 50.2% on the year for the second quarter, shrank less, by 39.6%, for the third quarter.
As the world gradually showed signs of getting back to normal, goods exports started picking up, declining only 7.7% for the quarter ended September -- better than the 15.9% contraction of the quarter ended June. Exports of services, which include spending by such nonresidents as tourists, shrank 73.3%, surpassing the second-quarter plunge of 68%.
The third quarter's slightly milder GDP contraction was in line with expectations of the market and business leaders. "We can say that our lowest point was in the second quarter," said Danucha Pichayanan, secretary-general of the economic planning agency, to executives last Wednesday.
"The third quarter is still negative but not a double-digit contraction," said Chayawadee Chai-Anant, a senior director at the Bank of Thailand central bank, to reporters Oct. 30.
The economic planning agency upgraded its 2020 economic forecast to a 6.0% shrinkage from a contraction between 7.3% and 7.8%. It also revealed its initial 2021 forecast of 3.5% to 4.5% growth.
The Bank of Thailand is scheduled to hold a monetary policy meeting on Nov. 18. "We have asked the central bank to manage the baht to be supportive for exports," Finance Minister Arkhom Termpittayapaisith said Wednesday.
The Thai currency has strengthened against the greenback this month, from 31.1 against the dollar to 30.1 -- the most expensive level since January. The risk of losing momentum in the export recovery could prompt the central bank to consider using its very limited room for further easing. The bank has cut its policy rate three times this year already.