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Thailand in recession?

It is yes, theoretically, as a recession is typically defined as two consecutive quarters of contraction in gross domestic product (GDP).

It was announced yesterday that the April-June contraction compares with a revised 1.7 percent decline in economic output in January-March.

To Suchada Kirakul, an advisor to Bank of Thailand, it’s just a "technical recession".

"Growth slows due to the high growth base in the fourth quarter of 2012," she said yesterday. And the fourth quarter growth was exceptional, driven mainly by stimulus measures and buoyant sentiment that encouraged massive spending.

Gross domestic product unexpectedly shrank 0.3 per cent in the three months through June from the previous quarter, when it contracted a revised 1.7 per cent.

News spread worldwide that Thailand’s economy enters recession, sparking panic selling in Thai shares and depreciation in the dollar/baht exchange rate.

At the open on Tuesday, Thai baht was 0.54 per cent weaker from the previous closing, to 31.53 per US dollar. The currency also weakened against the euro and Japanese yen; down by 0.59 pe rcent from the previous closing to 32.27 per 100 yen and down by 0.52 per cent to 42 against euro.

At 2.38pm, the SET index also lost 40.28 points or 2.88 per cent to 1,358.20 points. Yesterday, it lost 47.28 points or 3.27 per cent.






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