The Thai economy shrank by 1.8 per cent year on year in the first quarter, according to the National Economic and Social Development Council (NESDC).

The state planning agency also cut its forecast for 2020 gross domestic product (GDP) to a contraction of 5.0 to 6.0 per cent, possibly close to the worst decline since 1998 during the Asian “Yom Yam Gung” financial crisis.

The agency also lowered the country’s export forecast to a contraction of up to 8%.

The economy will be hit hardest in the second quarter by lockdowns, Thosaporn Sirisumphand, head of the National Economic and Social Development Council (NESDC), told a news briefing.

Meanwhile, the government began disbursing cash handouts in April handing out financial aid to millions of Thais affected by the COVID-19 crisis, and businesses were gradually allowed to reopen as Thailand moved to a new phase of relaxation.

But Krungthai Compass Research Centre said Thailand’s economy could contract by as much as 8.8% due to supply shock, weak domestic consumption, shrinking private investment and lower exports, with the highest contraction rate likely in the second quarter.

GDP fell a seasonally adjusted 2.2% in the first quarter compared with the previous three months, better than the median estimate of a 4.2% contraction in a Bloomberg survey of economists.

2020 Tourist Arrivals Forecast cut to 14 million

The number of foreign tourists may plunge by almost two-thirds or 65% this year, the lowest level since 2006, as the coronavirus pandemic hits global travel.

The Tourism Authority of Thailand (TAT) now predicts only 14 million to 16 million foreign visitors this year, down from 33.8 million projected in March.

Last year’s foreign arrivals were a record 39.8 million and spending from foreign tourists amounted to 1.93 trillion baht, or 11% of gross domestic product.