Thailand: 2020 GDP contracted more than 6% - UOB

UOB Group’s Economist Barnabas Gan reviews the latest GDP data in Thailand.

Key Quotes

“Thailand’s GDP fell 4.2% y/y (+1.3% q/q sa) in 4Q20, beating market estimates for a deeper contraction of 5.4% y/y (+0.8% q/q sa). This is up from the previous quarter which registered a fall of 6.4% y/y (+6.5% q.q sa) in 3Q20. Accounting for the latest data, Thailand’s full-year GDP plummeted 6.1% in 2020, marking its deepest contraction pace since the Asian Financial Crisis in 1998 at -7.6%.”

“On the back of two consecutive quarter-on-quarter expansions in 3Q20 and 4Q20, Thailand has officially seen a technical recovery.”

“On the flipside, Thailand’s lacklustre external environment has been the chief source of economic weakness.”

“Growth outlook for Thailand in 2021 will depend on three key factors: (1) COVID-19 environment, (2) domestic political situation and (3) global trade backdrop. The recent spike in COVID-19 infection in Thailand since December 2020 will likely negatively impact consumer confidence. Political noise surrounding protests calling for royal reforms may also inject growth headwinds should it escalate further. Lastly, the expected recovery in Thailand’s external environment, led by the uptick in economic momentum in both developed and developing economies to-date, may support growth in 2021.”

“Given the gradual recovery seen in Thailand’s macroeconomic environment as seen in its high-frequency data, we pencil Thailand’s GDP growth at +3.5% in 2021 (2020: -6.1%)… Thailand’s economy continues to be very dependent on both tourism and trade, while any unexpected worsening of COVID-19 infections and/or a slowdown in global trade winds would inject downside risks to Thailand’s growth momentum in 2021.”