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Thailand in slump with 7.1% fall in Q1

THAILAND'S economy shrank 7.1 percent in the first quarter from a year earlier, battered by a drop in exports and slump in tourism, the government said yesterday.

It was the biggest decline since 1998, when Thailand was struggling to extricate itself from the Asian financial crisis, according to the Office of National and Economic and Social Development Board.

The contraction, coming after gross domestic product fell 4.2 percent in the fourth quarter, confirms that Southeast Asia's second-biggest economy is in a recession - usually defined by two straight quarterly drops in GDP.

Exports declined 19.9 percent in United States dollar terms in the first quarter while imports fell 38.3 percent, the board said.

Thailand's tourism industry, the country's top foreign-income earner, is also suffering from the aftershocks of political turmoil, including major street protests and the closing down of an Asian summit by demonstrators in April.


"Although the government has expected it, we are still very concerned," said government spokesman Panithan Wattanayakorn. He said several stimulus packages were only implemented recently so the first quarter figures may not yet reflect their impact.

In a sign that the slowdown is hitting consumer spending, household expenditures during the quarter dropped 2.6 percent, the first such decrease since 1997. Investment fell 15.8 percent while government expenditure rose by 2.8 percent.

A bright spot was the agricultural sector, which grew 3.5 percent.

Sompop Manarungsan, an economist at Chulalongkorn University, said Thailand's economy would probably contract 4 percent to 5 percent this year.


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