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Thai economy accelerates in Q1 as tourism rebounds, outlook hinges on election outcome
BANGKOK – Thailand’s economy expanded more than estimated in the first quarter as the nation benefited from resurgent tourism, although the outlook hinges on its ability to demonstrate political stability.
Gross domestic product grew 2.7 per cent year on year in the three months to March, the National Economic and Social Development Council (NESDC) said on Monday. This was faster than the median 2.3 per cent expansion estimated by economists in a Bloomberg survey. GDP expanded 1.9 per cent from the fourth quarter.
While the post-pandemic return of tourists supported first-quarter performance, the outlook will depend on how smooth the transition of power is after Sunday’s vote showed pro-democracy parties dominated the general election. With 99 per cent of the votes counted, Move Forward Party and Pheu Thai Party were together projected to rack up 287 of the 500 seats in the Lower House.
It is not yet clear whether the parties will be able to form a government even if early remarks from both their leaders indicate a potential coalition. In Thailand, there are 250 senators appointed by the military who also get to vote on the choice of prime minister, along with the elected members of the Lower House. This could determine whether Thailand will be politically stable, which is key to winning and keeping investor faith in the economy.
“I hope that after this election and we get a clear picture of politics and we get a clear picture of the economic numbers, the market will be more attractive,” Stock Exchange of Thailand president Pakorn Peetathawatchai said in an interview with Bloomberg Television. “Once they see the recovery of all these industries, I am quite certain that foreign funds will look at Thailand and see us as a more stable environment for investment.”
The baht advanced by the most in more than five weeks, climbing as much as 0.9 per cent as election trends showed opposition parties were winning. The currency pared its gain to 0.5 per cent, still keeping it among the top performers in emerging Asia this year.
Signs of an orderly formation of a new government appeared after Pheu Thai, which is linked to exiled former premier Thaksin Shinawatra, offered to support Move Forward leader Pita Limjaroenrat as prime minister. This followed earlier comments by Thailand’s army chief that there was “zero chance” of the South-east Asian nation returning to military rule in the event of post-election turmoil.
The NESDC kept its 2023 GDP growth forecast unchanged at between 2.7 per cent and 3.7 per cent. Last year’s growth was 2.6 per cent.
It also kept its forecast for foreign tourist arrivals in 2023 at 28 million. Tourism typically accounts for 11 per cent to 12 per cent of GDP.
Chinese travellers, who accounted for about 30 per cent of visitors to Thailand before the pandemic, are returning again, with their numbers on course to hit one million a month starting October.
Thailand beat its tourism target in 2022 with 11.15 million foreign visitors. Pre-pandemic 2019 saw a record of nearly 40 million foreign tourists, who spent 1.91 trillion baht (S$75.7 billion). BLOOMBERG, REUTERS