Thailand economy shrinks most since 1997 on tourism collapse

BANGKOK: Thailand’s pandemic-shattered economy suffered its worst full-year performance in more than two decades, data showed Monday (Feb 15), with officials citing the toll of both a gutted tourism industry and ongoing political upheaval.

Last year’s 6.1 per cent contraction was the worst since a 7.6 per cent 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 to 3.5 per cent growth from an previous estimate of 3.5 to 4.5 per cent – 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.

READ: Thailand’s tourism industry hit hard by COVID-19

Although 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 COVID-19 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 freefalling 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.

READ: ‘A step in the right direction’: Thailand’s tourism operators welcome special visa for foreigners

The country’s economy was struggling even before the pandemic, which laid bare the deep inequality between the haves and have-nots of Thai society.

In response to the pandemic slump, the government implemented a record, 1.9 trillion baht (US$59.7 billion) stimulus package, cash handouts and tax incentives.

Further economic improvements will depend on managing the pandemic and boosting visitors, Danucha said.

“The outbreak and vaccine rollout, together with tourism recovery, are the main economic factors this year.”

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