Thailand's economy shrank for the first time in four years in the first quarter of this year, as a drought parched crops and tourists stayed away after the Boxing Day tsunami.
Gross domestic product fell a seasonally adjusted 0.6 per cent from the fourth quarter, when it expanded a revised
1.5 per cent, the National Economic and Social Development Board said yesterday in Bangkok.
The government agency cut its 2005 growth forecast from at least 5.5 per cent to as little as 4.5 per cent.
The worst drought in three years reduced the output of Thailand's farms and food processing factories, which provide a living for three-quarters of the country's 65 million people.
Prime Minister Thaksin Shinawatra is trying to revive growth with spending on transit systems, roads and irrigation.
"The economy faced almost everything bad in the first quarter, from drought and tsunami to high fuel prices," said Thanomsri Fongarunrung, an economist at Phatra Securities in Bangkok. The economy "won't get any worse."
Gross domestic product rose 3.3 per cent from a year earlier in the first quarter, yesterday's report showed.
Rice production dropped 34 per cent in the period and sugar cane output fell 31 per cent, says the central bank's website. Thailand is the world's biggest rice exporter and second-biggest sugar exporter.
Hotel bookings and international arrivals in resort areas including Phuket have fallen more than 70 per cent since the tsunami.
Higher crude oil prices have lifted costs for companies and consumers. "Thailand's future growth depends solely on oil prices," Ampon Kittiampon, secretary general of the National Economic and Social Development Board, told a press conference in Bangkok.
- BLOOMBERG
