Thailand’s economy shrinks with slump in GDP and exports

With a slump in tourism and exports, Thailand’s economy contracted 4.3 percent in the three months ended Dec. 31 from a year earlier, and may shrink by at least that much in the first quarter. With a dwindle in demand for its agricultural products, automobiles and electronics, Thailand is steadily heading towards recession following its neighbors Singapore, Taiwan, Hong Kong and Japan.

PM Abhisit Vejjajiva has promised immediate cash handouts and long-term infrastructure projects to stem the economy’s slide. “The economy will face a very hard time in the first half of this year,” Abhisit said today in Bangkok. “I’m confident that the government’s spending will help the economy rebound in the second half.” GDP may shrink in the first six months of 2009 before picking up in the second half, he said last week.

Thailand’s SET Index of stocks fell 0.6 percent as of 11:49 a.m. in Bangkok. The decline in gross domestic product was the largest since the fourth quarter of 1998 and may shrink as much as 1 percent this year, the first annual contraction in 11 years, as predicted by the government’s National Economic & Social Development Board.

The finance ministry forecasts a budget deficit of 349.5 billion baht in this fiscal year ending Sept. 30. The shortfall for the year starting Oct. 1 may widen by 12 percent as the global recession crimps revenue, Duangsmorn Warrarith, a deputy director of the Budget Bureau, said Feb. 17.