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Thailand economy likely shrank in Q3 on COVID-19 curbs

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© Reuters. FILEPHOTO: Sunset in Bangkok captured a view of Bangkok’s port, along Chao Phraya River, on June 2, 2021. REUTERS/Athit Perawongmetha/File photo

By Devayani Sathyan

BENGALURU, (Reuters) – Thailand’s economy is likely to have fallen back into recession last quarter as tight restrictions on COVID-19 spread hit consumption, and the already ailing tourist sector. A Reuters poll revealed that Thailand was in danger of stalling a recovery.

The median forecasts of thirteen economists polled showed that Southeast Asia’s second-largest economy fell 0.8% from last year, after emerging from its worst recession since 1998.

Gross domestic product (GDP), which had grown by just 0.4% during the preceding quarter, likely declined 2.5% on a quarterly basis.

November 15th will see the release of GDP data.

Forecasts for quarterly seasonally adjusted contraction ranged between 1.5% to 4.3%

Gareth Leather (Capital Economics senior Asia economist) stated that third quarter GDP numbers “are likely to make it for ugly reading.”

The slow recovery of the economy could be due to difficulties in the tourism industry despite the recent opening of the border. We expect that the GDP level will return to precrisis levels by mid-2013.

To help its vital tourism sector, Thailand earlier this month allowed vaccinated visitors https://www.reuters.com/business/aerospace-defense/bangkok-welcomes-first-tourists-quarantine-free-holiday-2021-11-01/#:~:text=BANGKOK%2C%20Nov%201%20(Reuters),visitors%20vaccinated%20against%20COVID-19 in to Bangkok without quarantine requirements.

The economic recovery will take time as foreign tourists are expected to be much lower than they were before COVID-19.

Last month the government cut https://www.reuters.com/article/testh-thailand-economy-testh-idUKKBN2HI0I0 its 2021 economic growth forecast to 1.0% from a previously projected 1.3%, making the fourth downward revision this year.

Thailand’s central bank https://www.reuters.com/world/asia-pacific/thailand-cbank-sit-tight-rates-awaiting-recovery-hard-hit-tourism-2021-11-08/#:~:text=BENGALURU%2C%20Nov%208%20(Reuters),tourists%2C%20a%20Reuters%20poll%20showed is expected to hold interest rates at a record low of 0.50% until at least 2023, according to a separate Reuters poll published on Monday.

Phacharaphot Nutramas, Krung Thai Bank’s chief economist, stated that despite a solid performance by the export sector, overall economic conditions were severely affected due to the tightening of government procurement policies and negative sentiment.

“The dire situation, however, rallied government action, resulting in vastly improved vaccine availability, the passage of the additional fiscal spending and the opening up of the country to foreign tourists. It remains to be determined if all of these urgent needs are sufficient to stop technical recession in the 2H 2021.

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