Thailand: Economy contracts at sharpest pace in over eight years in Q1 2020
Activity swung to contraction in the first quarter, with GDP decreasing 1.8% on an annual basis (Q4 2019: +1.5% year-on-year). Q1’s reading marked the sharpest decrease since Q4 2011.
Household spending growth moderated to 3.0% year-on-year in Q1 from 4.1% in Q4 2019, while government spending contracted 2.7% (Q4 2019: -0.9% yoy). Meanwhile, fixed investment dropped at the sharpest pace since Q1 2014, contracting 6.5% in Q1, which contrasted the 0.8% increase seen in the prior quarter.
Exports of goods and services fell 6.7% in Q1, marking the worst reading since Q3 2009 (Q4 2019: -3.4% yoy). On the other hand, imports of goods and services dropped at a softer pace of 2.5% in Q1 (Q4 2019: -7.9% yoy).
On a seasonally-adjusted quarter-on-quarter basis, economic activity dropped 2.2% in Q1, following Q4 2019’s 0.2% fall.
The economy is expected to shrink this year due to the Covid-19 pandemic, which will weigh heavily on global trade, manufacturing and tourism. The government’s fiscal stimulus, coupled with monetary policy action, should cushion the downturn somewhat; however, it will be insufficient to prevent a contraction.