Thailand's economy likely contracted for the second straight quarter in January-March, putting the country in recession after a plunge in exports and on course for its worst year since the 1998 Asian crisis, a Reuters survey showed. But some analysts predicted the worst might be over, with the economy bottoming out in either the first or second quarter.
They forecast a median, seasonally adjusted 1.6 percent contraction in gross domestic product in the first quarter, after a 6.1 percent plunge in the previous three months. Forecasts of the contraction ranged from 0.5 percent to 3.0 percent.
"Our forecast sees the economy now bottoming out and it will start to show positive quarter-on-quarter growth by the second half," David Cohen of Action Economics in Singapore said. "This is in line with our outlook for the global economy which is also expected to pick up before the end of the year, assuming no serious relapse in the financial sector," he said.
A similar picture is emerging in other Asian exporters. Singapore's economy, for example, shrank by an annualised, adjusted 14.6 percent in the first quarter, but the authorities saw some positive signs that it was bottoming out. On top of the global economic crisis, Thailand has also suffered political unrest that has hit tourism and investment.
Compared with a year earlier, Thailand's economy was estimated to have shrunk 6.3 percent in the first quarter, the worst performance in a decade, after a 4.3 percent contraction in the final quarter of 2008. The central bank's export-sensitive Industrial Production Index fell a seasonally adjusted 9.8 percent in January-March.
The dismal performance in the past six months has prompted Prime Minister Abhisit Vejjajiva to expand stimulus spending since he came to office in December. Nuchjarin Panarode of Capital Nomura estimated the economy had shrunk 7.0 percent in the first quarter from a year before but the contraction should moderate to 6.0 percent in the second.
Exports, generally equivalent to 60 percent of GDP, tumbled 19.9 percent in the first quarter from a year earlier after a 9.4 percent fall in the previous three months as recession-hit consumers in the West cut back on purchases of Asian goods. The survey forecast Thailand's GDP would contract 3.7 percent in 2009, the biggest setback in 11 years, before returning to growth of 2.6 percent in 2010.
"The economy may show contractions in every quarter this year but the shrinking pace in the second half should be slower," economist Usara Wilaipich of Standard Chartered Bank said. "Businesses should start rebuilding inventories in the second half but the economy lacks a real driver of growth," she said. The Bank of Thailand surprised markets on Wednesday by leaving interest rates unchanged, saying its current low rates were conducive to economic recovery, but it expressed a readiness to act again if economic risks increased.