Thailand’s economy grows 1.5% in Q1, beats forecasts

Thailand’s economy experienced a robust start to the year, expanding by 1.5% in the first quarter compared to the same period last year, according to official data released yesterday. This growth surpassed analysts’ expectations, indicating a positive shift for Southeast Asia’s second-largest economy.

Every quarter, the economy grew by a seasonally adjusted 1.1% from January to March, as reported by the National Economic and Social Development Council (NESDC). This increase was primarily driven by exports, private consumption, and private investment, although public investment and government expenditure saw a decline.

The positive quarterly growth helped Thailand avoid a technical recession, following a revised contraction of 0.4% in the final quarter of last year. Economists had predicted a 0.8% year-on-year GDP growth for the March quarter and a 0.6% increase from the previous three months, according to a Reuters poll. In comparison, GDP grew by 1.7% annually in the fourth quarter of 2023.

Thailand’s economic performance has been lagging behind its regional peers due to high household debt, rising borrowing costs, and weak exports amid a slowdown in China, its primary trading partner. Despite these challenges, the stronger-than-expected GDP figures could undermine the government’s argument for an interest rate cut.

Finance Minister Pichai Chuhavajira has expressed more concern about people’s access to finance than the interest rate levels.

Prime Minister Srettha Thavisin has been advocating for a rate cut for months, arguing it would benefit the economy. However, the central bank has maintained its key rate at a decade-high of 2.50%. The next rate review is scheduled for June 12.

GDP growth

The NESDC now forecasts GDP growth of between 2.0% to 3.0% this year, slightly down from its previous estimate of 2.2% to 3.2%. Last year’s growth stood at 1.9%.

Export growth this year is expected to rise by 2.0%, lower than the previously projected 2.9%. Headline inflation is anticipated to be between 0.1% and 1.1%, which is below the previous forecast and the central bank’s target range of 1% to 3%.

The agency also revised its prediction for foreign tourist arrivals this year to 36.5 million, down from an earlier estimate of 35 million.

From January 1 to May 12, Thailand welcomed 13.16 million foreign tourists, marking a 39% increase year-on-year. Chinese visitors topped the list at approximately 2.6 million. In 2019, before the pandemic, nearly 40 million foreign tourists visited Thailand, setting a record.

Last month, the finance ministry adjusted this year’s growth forecast to 2.4%, down from 2.8%. However, it suggested that growth could reach 3.3% if the government’s flagship 500 billion baht household stimulus scheme is implemented in the fourth quarter as planned, reported Bangkok Post.