BANGKOK - Thailand's economy suffered a double-digit contraction in the fourth quarter of 2011, the sharpest on record, it said Monday after the kingdom's worst floods in half a century pummelled industry.
It was the sharpest drop in a single quarter since comparable records began in 1993, according to Apichai Thamsermsukh, an official at the government agency. The 1997-98 Asian financial crisis saw smaller quarterly declines but over a longer time period, he said.
"This is an unusual drop caused by the manufacturing sector," Apichai added.
The months-long floods last year killed hundreds of people and took a heavy toll on Thailand's industrial heartland north of Bangkok, with many factories forced to close temporarily.
For the whole of 2011, Thailand's economy expanded by 0.1 percent, after an increase of 7.8 percent in 2010, the figures showed, missing analyst forecasts.
But the government and analysts are optimistic about prospects for a rebound, with Finance Minister Kittiratt Na-Ranong predicting last week that the export-dependent economy could grow by 7.0 percent in 2012.
"Last year's floods severely affected the Thai economy but the contraction is only temporary," said Standard Chartered economist Usara Wilaipich.
"There will be an economic recovery this year, driven by domestic demand and manufacturing, which are rebounding."
But she said the revival would be slow in the first half of 2012 because industrial production and exports would take time to recover to normal levels, while the global economic outlook remains uncertain.
"Semi-conductor makers in particular need to import and install new machines replace those damaged by the flood. I think their operations will be back on track in the third quarter."
At their height last year's floods affected 65 of the country's 77 provinces, deluged hundreds of thousands of homes and forced the closure of large industrial parks, disrupting global supply chains.
After the clean-up operation began towards the end of the year, many of the worst-hit companies said it would be several months at least before their operations returned to normal.
Japanese auto giant Honda has idled operations since early October at its factory in Ayutthaya, where it was forced to destroy more than 1,000 cars that were submerged by the muddy waters.
Thailand's central bank in January cut its benchmark interest rate for the second time in three months, by 0.25 percentage points to 3.00 percent, in a bid to stimulate the weakened economy.
Experts see scope for another rate cut, particularly as inflation slowed sharply in December to an annual rate of about 3.5 percent.
"Monetary policy can be loosened as inflation is easing," said Usara.
Investors took the weak data in their stride, with Thai stocks up about 0.7 percent in early afternoon trade on optimism about the Chinese economy and prospects Greece will secure a long-awaited bailout to avert a debt default.