Thai, Japan economies register deep contractions


TOKYO—Japan’s pandemic-hit economy shrank in 2020 for the first time in more than a decade, but the contraction was less than expected and it ended the year on a strong note thanks to a pick-up in exports and huge government support.

Still, analysts warned the near-term outlook could be bumpy as fresh virus restrictions dampen domestic consumption, and with borders still closed to tourists less than six months before the postponed Olympics.

The world’s third-largest economy shrank 4.8 percent last year, its first annual contraction since 2009 at the height of the global financial crisis.

A man cycles past closed shops on Khao San Road, a once popular tourist strip in Bangkok on February 15, 2021, as Thailand records it worst economic performance in more than two decades. AFP

However, the figure was better than forecast in a Bloomberg survey of analysts thanks to a strong October-December performance, which saw the economy expand 12.7 percent from the previous quarter on an annualized basis.

Government stimulus measures of about $3 trillion since the COVID-19 pandemic began provided crucial support.

Meanwhile, Thailand’s pandemic-shattered economy suffered its worst full-year performance in more than two decades, data showed Monday, with officials citing the toll of both a gutted tourism industry and ongoing political upheaval.

Last year’s 6.1-percent contraction was the worst since a 7.6-percent decline during the Asian financial crisis in 1997 and officials said they expect the economy to expand at a much slower pace than initially predicted in 2021.

The downgrade—to 2.5-3.5 percent growth from an previous estimate of 3.5-4.5 percent—came despite a slight improvement in the final three months of the year.

“It has rebounded from the previous quarter due to the government’s stimulus package that boosted spending,” Danucha Pichayanan, the secretary general of the Office of the National Economic and Social Development Council (NESDC), said at a news conference.

Shahana Mukherjee, an economist at Moody’s Analytics, said better-than-expected growth in the fourth quarter was driven by Japan’s “resilient trade position” with exports up and a smaller rise in private consumption.

“The intense domestic third COVID-19 wave moderated Japan’s recovery momentum in the last months of 2020,” she said.

“But with exports continuing to recover and the Pfizer vaccine approval coming through, the months ahead should see a stronger revival,” Mukherjee added.

In Thailand, allthough the kingdom was largely spared the worst of the virus, pandemic-spurred partial lockdowns have hit the economy hard.

Thailand has registered more than 24,500 coronavirus cases, with a jump of about 20,000 infections since late last year, after a second wave that stemmed from the country’s largest seafood market.

Some 40 million tourists had been expected to arrive in 2020, but as international travel ground to a trickle, their absence hammered the country’s services sector, bruising entertainment, retail, hotels and restaurants.  

The kingdom’s free-falling economy has been a factor in the youth-led protest movement that is calling for premier Prayut Chan-O-Cha’s resignation, constitutional reform and changes to the once-untouchable monarchy.

Asked about the political climate, Danucha implied it was delivering a further blow.  

“The Thai economy relies on investment and exports. The political situation will affect investors’ confidence,” he said.

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