Thai Economy Dips Smaller Than Expected as Recovery Starts

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Thailand’s economy last quarter suffered a smaller contraction than expected, with the Southeast Asian nation on track to rebound from the worst of the pandemic. 

Gross domestic product shrank 0.3% from a year ago, the National Economic and Social Development Council said Monday. That’s better than the median estimate of a 1.3% contraction in a Bloomberg survey of economists and compares with the prior quarter’s revised 7.6% growth. 

Economic activities started to recover since late August as the pandemic situation has improved, leading to an easing of control measures, Danucha Pichayanan, NESDC secretary-general, said in the council’s first on-site briefing since April, when the delta variant hit the nation.

The NESDC on Monday also released a GDP growth forecast for next year at 3.5%-4.5% and a 1.2% expansion for this year. By comparison, the Finance Ministry separately had earlier forecast 4% growth for 2022 and and 1% for 2021, while the central bank predicted 3.9% and 0.7%, respectively.

The benchmark SET Index gained as much as 0.5% when it opened after the data release, before paring gains to trade up 0.3% as of 11:32 a.m. local time, set for a third day of advances.

What Bloomberg Economics Says...

“The contraction in Thailand’s economy last quarter was not nearly as deep as feared... GDP should recover both in sequential and year-earlier terms in 4Q and going forward, reflecting greater traction that has been enabled by broader vaccinations and further reopening of borders to foreign tourists.”

-- Tamara Mast Henderson, Asean economist

For the full note, click here

“The economy seems to be on a recovery trend,” said Nattaporn Triratanasirikul, an economist at Kasikornbank Pcl’s research unit, though she cautioned that rising oil prices and the impact from monsoon floods, as well as continued caution by virus-wary travelers, will put pressure on the local economy. “The recovery may continue, but it will be slow.”

The Bank of Thailand said last week that the economy has bottomed out last quarter and entered the recovery phase following the relaxation of containment measures and the re-opening of the country. To support the nascent recovery, the government and the central bank have teamed up with as much as $2.8 billion in fiscal and financial measures.

Headline inflation is forecast at 0.9%-1.9% next year, after an expected 1.2% this year, the NESDC said Monday.

The pace of vaccinations in Thailand has accelerated in recent months, with 62% of the population receiving at least one dose and about half getting two, setting the government on pace to beat its target of at least 70% of fully-vaccinated residents by year-end. 

The pace of daily new infections has dropped to less than 10,000 since mid-October from its peak of more than 20,000 cases in August. 

On a seasonally adjusted basis, GDP in the third quarter fell 1.1% from the prior quarter, when it grew a revised 0.1%, the NESDC said Monday. 

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