The latest economic indicators in February 2009 released by the Bank of Thailand (BoT), indicated that domestic spending was deteriorating sharply as seen in both flagging investment and consumption. Exports – excluding gold shipments that soared significantly – were still contracting close to January. The economic performance during 2M09 showed that Thailand would remain mired in a severe slump in 1Q09 in a continuation from 4Q08. Domestic spending, as seen from Private Consumption and Private Investment, shrank by 5.5 percent and 11.3 percent, respectively, in the first two months compared to the growth of 0.6 percent and -0.4 percent in 4Q08. Manufacturing production data also showed a 20.5-percent contraction over 2M09, much worse than the 8.0-percent shrinkage in 4Q08. On the external front, fragility in trade partners' economies dealt a heavy blow to Thai exports, which recorded an 18.4-percent contraction, against the 9.4-percent shrinkage in 4Q08.
KASIKORN RESEARCH CENTER (KResearch) projects that the Thai economy in 1Q09 would contract in a range of 4.5-6.0 percent, being plagued by moribund private spending and a severe contraction in exports throughout 1H09. Close attention should thus be paid to the domestic political situation and fragile global economy that has yet to show any clear sign of recovery in 2009.