Thailand’s GDP contracted 12.2% in 2Q20, while a contraction of more than 6.0% is expected for the whole year

The Thai economy shrank by 12.2%YoY in 2Q20, which is better than the 13.0% to 17.0%YoY contraction projected by the market, thanks to the expansion of government spending and investment under various economic stimulus measures, especially the THB5,000 relief fund per head for 3 consecutive months under the “No One Left Behind Project”. Additionally, the budgetary disbursement rate in 2Q20 was higher compared to the same period of last year, both for the regular expenditure and capital expenditure budgets. As a result, the expansion of public investment has driven the construction sector to continue growing in 2Q20.

            KResearch expects that the Thai economy may experience the deepest contraction in 2Q20 and continue to shrink at a slower pace during the rest of the year. However, the Thai economy still faces high uncertainty due to factors such as (1) Heightened global economic risks arising from the COVID-19 outbreak, tensions between the US and China, and political issues in the US; (2) Pressure from Thai Baht appreciation in line with the global economic situation and (3) Domestic political issues.

​ Amidst the uncertainties mentioned above, the government may introduce additional stimulus measures to sustain the sluggish Thai economy, in particular a new round of stimulus measures mainly aimed at supporting employment, SMEs, and micro entrepreneurs. KResearch will monitor these soon to be issued measures before assessing and revising its projection of the Thai economic growth rate, given the preliminary projection that the Thai GDP will contract by more than previously expected at 6.0% in 2020.  

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