Thai GDP growth beats estimates, inflation pace revised up

[BANGKOK] Thailand’s economy grew faster than expected last quarter, buoyed by rising exports and tourist arrivals, firming its recovery as it faces risks this year from inflation and the Omicron variant.

Gross domestic product (GDP) during October-December rose 1.9 per cent from a year ago, the National Economic and Social Development Council (NESDC) said Monday (Feb 21). That beat the median growth estimate of 0.8 per cent in a Bloomberg survey and compares with the prior quarter’s revised 0.2 per cent contraction.

The council maintained its 3.5 per cent to 4.5 per cent GDP expansion outlook for this year while raising its headline inflation forecast to 1.5-2.5 per cent, from 0.9-1.9 per cent in November.

Growth in 2022 will be supported by rising demand as pandemic restrictions ease and vaccinations continue, as well as a recovery in the tourism sector, government spending and external demand amid continued global growth, Danucha Pichayanan, NESDC secretary-general, said at a briefing Monday, adding that inflation will be a key pressure this year.

The baht reversed an earlier decline to trade up of as much as 0.1 per cent against the US dollar.

As part of its “living with Covid” strategy, Prime Minister Prayuth Chan-Ocha’s government has gradually relaxed restrictions to boost the economy, which had the slowest growth in South-east Asia last year. Rising price pressures – which last month exceeded the central bank’s inflation target for the first time since April 2021 – and the Omicron wave have raised concerns about the recovery this year.

The economy grew 1.6 per cent in 2021, rebounding from a revised 6.2 per cent contraction in 2020. Economists had forecast 1.2 per cent growth last year. On a seasonally adjusted basis, GDP rose 1.8 per cent in the fourth quarter from the previous 3 months, when it fell a revised 0.9 per cent, the NESDC said.

The consumer price index rose 3.23 per cent in January, above the Bank of Thailand’s 1-3 per cent target. The central bank, which earlier this month held its benchmark interest rate at a record low for a 14th straight meeting, said average headline inflation this year is likely to exceed its 1.7 per cent forecast.

A tourism revival may help jump-start the economy after the government reopened the country’s borders last November. Thailand welcomed 230,497 tourists in December, the highest monthly figure since March 2020, at the start of the pandemic. Still, the total of 427,869 foreign visitors in 2021 was a fraction of the 40 million in 2019, when the tourism industry generated revenue of more than US$60 billion. BLOOMBERG