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(Bloomberg) — Thailand’s economy continued to climb back from the pandemic blow in the final quarter of 2020, supported by government stimulus and local demand, though full-year performance was the worst since the Asian financial crisis more than two decades ago.

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Gross domestic product shrank 4.2% from a year ago, the National Economic and Social Development Council said Monday, improving from the prior quarter’s 6.4% contraction and better than the median estimate of -5.4% in a Bloomberg survey of economists. Compared to the previous three months GDP rose a seasonally adjusted 1.3%, better than the median estimate of 0.8% in a Bloomberg survey.

“This year, apart from stimulating local consumption, we need to attract more foreign investment, so the political situation will be important to boost confidence,” Danucha Pichayanan, the council’s secretary general, told reporters in Bangkok. “The government’s priority is containing the outbreak to a limited area and procuring enough vaccines to create herd immunity soon.”

For all of 2020, the economy contracted 6.1%, compared with 2.3% growth in 2019 and the 6.4% contraction expected. It was the worst showing since a 7.6% decline during the 1998 financial crisis.

The baht extended its gains after the data, up 0.11% against the dollar as of 10:23 a.m. local time, holding earlier gains. The benchmark SET Index rose 0.6%.

© Bloomberg Thailand’s contraction eased in fourth quarter

The Covid pandemic has hit two of Thailand’s main growth drivers, tourism and trade, particularly hard. The government has responded with a series of measures, including tax incentives and a $1.7 billion stimulus package in the fourth quarter, as well as a $7 billion program of cash handouts in the first quarter of this year after a fresh outbreak began in mid-December.

The council lowered its 2021 growth forecast to 2.5%-3.5%, compared to a previous estimate in November of 3.5%-4.5% growth. That forecast is in line with the 2.8% rise seen by the country’s Finance Ministry and the 3.2% growth the central bank predicts.

“We expect economic activity to turn a corner gradually while remaining asynchronous, as part of the turnaround requires firmer global demand and international borders to reopen,” said Radhika Rao, an economist at DBS Bank Ltd. in Singapore. “Fiscal support will be key to underpin recovery this year as monetary easing runs its course.”

Steady Rat

Earlier this month, the Bank of Thailand held its key interest rate steady for a sixth straight meeting, saying fiscal measures and policy coordination among government agencies would be critical to support the economy going forward.

Other points from the briefing:

Exports are expected to rise 5.8% this year, up from 4.2% growth predicted in NovemberThe council now expects 3.2 million tourists to arrive in 2021, down from a previous estimate of 5 million; tourism revenue forecast cut to 320 billion baht vs 490 billion baht forecast previouslyThe government is likely to begin easing travel restrictions in the fourth quarter of this yearSome 50% of Thailand’s population should be vaccinated against coronavirus by the end of this year, and 75% by the first half of 2022Risks to this year’s outlook include a delay in vaccine rollout, a more severe virus outbreak, a delay in the tourism recovery and drought

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