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Wednesday, 18 May 2016 00:00 - - {{hitsCtrl.values.hits}}
Reuters: Thailand’s economy outpaced expectations in the first quarter to expand at the fastest annual rate in three years, providing some relief for a military government that has struggled to stimulate growth in the two years since it seized power.
But with exports expected to shrink for a fourth year running and consumption crimped by high household debts and the worst drought in a decade, economists say more fiscal stimulus and lower interest rates may be needed to prevent growth momentum from stalling.
Southeast Asia’s second-largest economy grew a seasonally adjusted 0.9% in the first quarter, boosted by government spending and tourism, the National Economic and Social Development Board (NESDB) said on Monday. The pace was faster than 0.8% in the fourth quarter and 0.6% forecast in a Reuters poll.
From a year earlier, growth was 3.2%, better than 2.8% previously and higher than economists’ estimates.
Thailand’s economy remains fragile two years after a military coup ended months of political unrest as its main growth engines - exports and domestic demand - remain weak.
“Thailand’s economy got off to a solid start to 2016, but high household debt and continued political uncertainty are likely to drag down growth again over the coming quarters,” said Krystal Tan, economist at Capital Economics based in Singapore.
The NESDB expects exports to shrink 1.7% this year, versus 1.2% growth it predicted earlier. Accounting for about two-thirds of GDP, exports have fallen in the past three years due to tepid global demand and China’s slowdown.
The NESDB revised its 2016 GDP growth forecast to 3.0-3.5% from 2.8-3.8%. Growth last year was 2.8%.
Tourism and fiscal spending will underpin growth this year, while expected mid-year rains should ease drought, NESDB head Porametee Vimolsiri told reporters.
In a bid to spur domestic activity, the junta has ramped up investment and launched stimulus measures, although big infrastructure projects have been slow to get underway.
In January-March, government investment rose 12.4% on year while private investment grew 2.1%.
Tourism, accounting for 10% of GDP, has been a rare bright spot. Anti-Chinese sentiment in Taiwan and Hong Kong have resulted in more Chinese tourists for Thailand.
