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Thailand's economy shrinks 4.3 percent in fourth quarter
Associated Press - February 23, 2009
Ambika Ahuja, Bangkok – Thailand's economy shrank for the first time in nearly a decade in the fourth quarter as the global slowdown squelched exports and political unrest hit tourism, the government said Monday.
Gross domestic product contracted a bigger-than-expected 4.3 percent from a year earlier in the last three months of 2008, according to the National Economic & Social Development Board. The economy, Southeast Asia's second largest, grew 2.6 percent in 2008.
The last time Thailand's economy shrank was in the first quarter of 1999. The agency said the economy may contract as much as 1 percent in 2009. It previously forecast growth of as much as 4 percent for this year.
"There are many risk factors on the downside for the economy," said Usara Wilaipich, a senior economist at Standard Chartered Bank. "Growth will likely be negative in the first half and it will likely stabilize in the second half as fiscal stimulus takes effect. But it also depends on global factors and how fast the US economy recovers," she said.
Thailand, like its export-dependent neighbors, has been battered by the slump in global demand. Exports posted their steepest fall in 12 years in January as demand for the country's cars, hard drives and electrical goods evaporated. Exports account for 65 of the country's GDP.
Labor Minister Phaithoon Kaeothong last week said that Thailand's manufacturers may cut as many as 100,000 jobs this year due to the slump in exports.
Tourism, which makes up about 6 percent of the economy, was hard hit by anti-government protesters shutting down Bangkok's two main airports for a week just as the high season began late last year.
Prime Minister Abhisit Vejjajiva's government has introduced measures including cash handouts to the poor and long-term infrastructure projects to stimulate the economy.
Earlier this month, Thailand's Parliament approved a 116.7 billion-baht ($3.3 billion) package which will take effect next month to stimulate domestic demand and create jobs.
The funds will be used to support social security, tourism, free education and training programs, create jobs and provide low-interest loans to farmers.
A portion of the funds was also doled out as a one-off handout to several millions of low-income employees and government officials.
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