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Thai economy retreating fast

THAILAND'S economy shrank more than expected in the fourth quarter as exports and tourism slumped, pushing the country closer to its first recession in a decade.

Southeast Asia's second-biggest economy contracted 4.3 percent in the three months to December 31 from a year earlier, and may shrink by at least that much in the first quarter, the government said yesterday, said Bloomberg News.

Thailand may follow neighbors Singapore and Japan into recession as demand dwindles for its agricultural products, automobiles and electronics. Prime Minister Abhisit Vejjajiva, facing protests after two months in power, has pledged immediate cash handouts and long-term infrastructure projects to stem the economy's slide.

"Things are going to be looking pretty tough in the first quarter," said Nicholas Bibby, an economist at Barclays Bank Plc in Singapore. "There will be no relief coming through from exports. With heightened political tensions, tourism receipts have been badly affected."

Thailand's SET Index has lost 3.8 percent this year. The baht currency has lost 2.7 percent.

The decline in gross domestic product was the largest since the fourth quarter of 1998. The median estimate of 17 economists surveyed by Bloomberg News was for a 2.8-percent drop in last year's fourth quarter.

Tough first half

"The economy will face a very hard time in the first half of this year," Abhisit said yesterday in Bangkok. "I'm confident that the government's spending will help the economy rebound in the second half." GDP may shrink in the first six months of 2009 before picking up in the second half, he said last week.

Isara Ordeedolchest, an economist at KTB Securities Ltd in Bangkok, said: "Growth will continue to be negative in the first half of this year and should turn more stable in the second half, but that totally depends on the global economy and how the government designs its fiscal stimulus."

GDP may shrink as much as 1 percent this year, the first annual contraction in 11 years, the government's National Economic & Social Development Board said yesterday.

Trade was disrupted late last year when demonstrators seeking to oust the previous government shut down Bangkok's main international airport.


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