Things look a little more rosy for Thailand's economy following its latest gross domestic product data released Monday by the National Economic and Social Development Council.
Thailand's gross domestic product shrank 2.6% on year in the first quarter following a 4.2% contraction in the fourth quarter of last year, the agency said.
The number was better than market expectations of a 3.3% fall. This was the fifth consecutive quarter of contraction in gross domestic product but the smallest decline since the first quarter of last year on "an improvement in both global demand and domestic activity."
The agency said private consumption dropped 0.5% on year compared with a rise of 0.9% in the last three-month period of last year. "Net external demand contributed negatively to gross domestic product growth as exports fell 10.5% while imports rose 1.7%. At the same time, fixed investment rebounded sharply - 7.3% on year in the quarter compared with 2.5% in the fourth of 2020.
"On the production side, output contracted mostly for accommodation and food service activities - down 35.0% on year compared with 35.2%." The agency revised its economic forecast to an expansion of 1.5%-2.5% from an increase of 2.5%-3.5% projected in February."
"Growth was mainly supported by a rebound in fixed investment," Capital Economics said Monday. "There were falls in both household consumption and government spending. Also, net external demand contributed negatively to gross domestic product as exports grew by 8% compared with a fall of 1.3% in the fourth quarter while imports rose at a faster 12.9% compared with an 8.3% rise."
On the production side, activity grew much softer in the nonagricultural sector and industrial output rose. Services activity fell, the state agency reported.
"Having gone 99 days without a single case of community transmission last year, virus cases have exploded in recent months. Thailand recorded 9,635 new infections yesterday, a record high. The government has recently introduced a host of new restrictions, including shutting schools and the closure of much of the hospitality industry," Capital Economics said.
"The government has tightened border restrictions in response to the jump in cases. The mandatory quarantine period has been extended from 10 to 14 days. Plans to reopen the resort island of Phuket by July are now under threat. The government's target of attracting 3 million tourists this year (which would represent a 93% fall on 2019 levels) is looking increasingly out of reach," the economists said.
"There has been some good news to report. Merchandise exports are performing strongly - they grew by 8.5% y/y in March - the fastest pace in nearly three years. In dollar terms, they are now at a record high. A steady recovery in global demand as economies reopen on the back of vaccine rollouts should help to support external demand over the coming quarters.
"Meanwhile, fiscal policy will remain supportive. So far this year the government has announced additional stimulus measures worth around 3% of gross domestic product, mainly in the form of soft loans and cash handouts. The government's strong fiscal position means further measures are likely over the coming months."