NESDB's earlier GDP forecast for 2009 was 3-4 per cent.
"This is the first quarterly contraction in 10 years, also due to the declining tourism revenue as a result of the closure of Suvarnabhumi Airport," said Ampon Kittiampon, secretary-general.
In the fourth quarter of 2007, the economy expanded 4.9 per cent.
It forecast that this year's exports could contract as much as 13 per cent. The January's figures already showed a drop of over 20 per cent on year.
As the deterioration continued, Ampon expected the economy would bottom out in the third quarter and should pick up in the fourth quarter.
According to the economic think tank, GDP expanded 2.6 per cent last year, lower than the projection of 4-5 per cent, chiefly due to the economic contraction in the fourth quarter when the global financial crisis surfaced. In the quarter, GDP contracted 4.3 per cent.
Unemployment is also expected to rise to 2.5-3.5 per cent, or about 900,000-1.3 million. Meanwhile, consumer prices may contract 0.5 per cent or expand 0.5 per cent, due to the sharp plunge in oil and commodity prices, based on the estimated Dubai crude oil price at US$45-55 per barrel.