Thai Q1 GDP surges, economy bouncing back from floods
BANGKOK, May 21 — Thailand’s economy expanded a robust 11.0 per cent in the first quarter from the previous three months, rebounding from last year’s severe flooding, and strong full-year growth is expected due to a jump in consumption and investment after the disaster.
The January-March expansion — the highest since Thailand started measuring quarterly gross domestic product in 1993 — and external risks from the euro zone’s problems reinforce the view that the central bank will leave interest rates steady at 3 per cent on June 13 and maybe for the rest of the year.
“Looking forward, we believe that risks to growth will shift from capacity constraints to weak external demand due to the European debt crisis,” said Usara Wilaipich at Standard Chartered Bank in Bagkok. She saw no rate change this year.
The quarterly growth of 11.0 per cent in Southeast Asia’s second-largest economy compared with the 10.2 per cent expected in a Reuters poll, and came after a revised record contraction of 10.8 per cent in the final quarter of 2011 due to the floods.
Showing the extent of the catastrophe, the economy grew just 0.3 per cent from a year before, according to today’s data from the National Economic and Social Development Board (NESDB). However, that beat the consensus of a 0.5 per cent contraction in the Reuters poll.
In comparison, Indonesia’s economy grew 6.3 per cent in the first quarter from a year earlier and Singapore’s grew 1.6 per cent.
The worst floods in at least 50 years battered industrial zones at the heart of the economy last October, with car and electronics makers the worst hit.
Around a quarter of the affected plants have still not reopened, but the central bank has said manufacturing should get back to normal by the end of June.
To help business deal with the floods, the Bank of Thailand cut its policy rate in November and again in January before leaving it steady at the two most recent meetings. It recently said the recovery had gained traction and that inflationary pressures were growing..
The NESDB said the economy was expected to grow 5.5-6.5 per cent this year, unchanged from its previous forecast in February, due to strong consumption and investment after the floods as well as governemnt stimulus policies.
This month, the central bank raised its forecast for 2012 growth to 6.0 per cent from 5.7 per cent but economists in a Reuters poll have predicted just 5 per cent..
But the agency cut its export growth forecast to 15.1 per cent for this year from the 17.2 per cent seen in February, and compared with the 9.2 per cent growth projected by the central bank this month.
The NESDB stuck to its headline inflation forecast of 3.5-4.0 per cent for this year. — Reuters