Thailand’s economy fell into recession following a contraction in the past two consecutive quarters, as strong baht and a weak global demand hit the country’s exports.
In the July-September period, the gross domestic product (GDP) of Thailand shrank by 0.2 percent compared with a revised contraction of 0.6 percent in the previous quarter, the National Economic and Social Development Board said on Monday.
Exports growth in the country slowed to 11.7 percent in the third quarter on annual basis, compared with 22.3 percent growth in the second quarter.
Exports were weakened by a stronger Thai baht which rose to a 13-year high against the greenback. The Thai government has imposed a tax on foreign investments in Thai bonds in one of its major efforts to curb the strength of its currency.
Domestic consumption also weakened in Thailand as household spending rose 5 percent in Q3 year-on-year, compared with 6.4 percent increase in April-June quarter. Government spending fell sharply to 2 percent from 8.4 percent in the same quarter a year earlier.
Due to unfavorable weather conditions, agricultural sector growth contracted by 3.3 percent in the third quarter.
Thailand’s central bank kept the interest rates unchanged at 1.75 percent in October amid uncertain global economic outlook. In the previous two months, the bank had increased rates by 50 basis points cumulatively. The central bank is due to meet on December 1.
However, the government upgraded the GDP growth forecast to 7.9 percent in 2009 taking into account strong performance in the previous quarters. GDP is projected to slow to between 3.5 percent and 4.5 percent in 2011.
Analysts said that the latest data showed the Thai economy normalizing after a strong rebound from recession.