Page last updated at 12:01 GMT, Monday, 23 February 2009

Sharp decline in Thailand economy

Giant Guardian at the Grand Palace in Bangkok
Anti-government protests hit tourism in Thailand

Thailand's economy shrank at a record pace in the last three months of 2008 amid plummeting exports and tourism.

The economy shrank 6.1% in the October to December period from the previous quarter, the National Economic and Social Development Board (NESDB) said.

This was the largest contraction since records began in 1993. The NESDB said the economy might contract 1% in 2009.

The export-oriented Asian economy has been hit by the global downturn and political unrest at the end of 2008.

Anti-government protesters shut down Bangkok's airports, hitting tourism, one of the key sectors of the economy.

'Surprise to everyone'

The numbers are bad, and well below market and government expectations
Carl Rajoo, Forecast

Compared with the same period a year earlier, the economy contracted by 4.3% in the fourth quarter.

Exports, which account for more than 60% of Thailand's gross domestic product, dropped 9.4%.

The NESDB also forecast that exports would fall 13.1% in 2009 after growing by 16.8% in 2008.

Carl Rajoo, an economist at Forecast, said: "The numbers are bad, and well below market and government expectations.

"While we have been consistently expecting weakness in economic growth, the extremely sharp drop in manufacturing and trade data towards the year-end came as a surprise to everyone, indicating the clear susceptibility of the nation to external demand pressures."

The Bank of Thailand has reduced its key lending rate by a combined 1.75 percentage point to 2% since December in an attempt to save the economy from sliding into its first recession in over a decade.

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