Thai Q2 GDP beats forecasts, but outlook cut as COVID-19 hampers recovery

BANGKOK: Thailand's economy unexpectedly grew in the second quarter from the first helped by exports and government spending even though fresh coronavirus outbreaks battered consumption and tourism.

The government again cut its 2021 economic growth forecast to 0.7-1.2% from 1.5-2.5% as the outbreak and lockdown measures crimped domestic activity amid Thailand's slow vaccination rollout. The economy slumped 6.1% last year.

Thailand's biggest COVID-19 outbreak so far has seen a spike in cases and deaths, prompting tougher containment measures in Bangkok and nearby provinces in July before being extended this month, with lockdown areas expanded to 29 provinces - accounting for around 80% of GDP.

Southeast Asia's second-largest economy expanded a seasonally adjusted 0.4% in the second quarter from the previous quarter, data from the National Economic and Social Development Council showed, versus a forecast 1.4% drop in a Reuters poll.

From a year earlier, gross domestic product (GDP) grew 7.5% in the June quarter, beating the 6.4% rise forecast by economists, due largely to a GDP slump last year when the pandemic first hit.

The agency cut its GDP outlook for the full year to 0.7-1.2% from a previous forecast of 1.5%-2.5% growth.

However, increased exports, a rare bright spot in the economy, and fiscal measures have lent some support.

The NESDC now expects exports to grow 16.3% this year versus a 10.3% rise projected earlier.

But the agency predicts only 0.15 million foreign tourists this year, down from a previous forecast of 0.5 million. That compared with nearly 40 million foreign visitors in 2019.

Last week, Bank of Thailand Governor Sethaput Suthiwartnarueput told Reuters that while a contraction was "unlikely" in 2021, it was possible if the lockdown got extended further.. The central bank expects 0.7% GDP growth this year.

The latest outbreak, which began in April, has accounted for most of Thailand's total cases and deaths at a time when it was preparing to reopen more broadly to foreign visitors.

Thailand could see coronavirus cases double to 45,000 per day by early next month, even with the current lockdown measures in place, its COVID-19 taskforce said last week.

The government approved a further 500 billion baht ($15 billion) borrowing this year for relief measures.