Thailand’s economy strengthened in the fourth quarter on exports and consumer spending, capping the fastest annual expansion in 15 years and adding to the central bank’s case to raise borrowing costs further.
GDP rose 1.2 percent from the previous three months, the National Economic and Social Development Board said in Bangkok yesterday. That compared with a revised 0.3 percent decline in the third quarter, which reflected a slump in the middle of last year stemming from political unrest and flooding, and the 0.9 percent median estimate in a Bloomberg News survey of 10 economists.
The Bank of Thailand is poised to extend interest-rate increases after saying inflation is a threat, as counterparts from Indonesia to China also strive to damp jumps in the cost of living. Thai Prime Minister Abhisit Vejjajiva has raised the minimum wage and will boost civil service pay, which may push up prices ahead of an election he plans to hold by the end of June.
“A recovery in developed economies toward the year-end supported external demand and export-oriented countries like Thailand will continue to see benefit from that,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc in Tokyo.
The baht climbed 0.1 percent to 30.56 per US dollar as of 11:06am in Bangkok yesterday from Thursday last week and has risen about 3.2 percent in the past six months, the least apart from the Hong Kong dollar and Indonesia’s rupiah in a basket of 10 major Asian currencies tracked by Bloomberg, excluding the yen.
On a year-on-year basis, the expansion slowed to 3.8 percent from a revised 6.6 percent advance in the three months through September last year. Growth also eased last quarter from a year earlier in neighbor Malaysia while quickening in Indonesia, the Philippines and Vietnam. Thailand has joined Indonesia, South Korea, India and China in boosting borrowing costs this year.
The central bank is expected to raise rates further to tame price pressures, Arkhom Termpittayapaisith, secretary-general at the development board, told a news conference in Bangkok Monday.
Economic “growth momentum will continue this year,” supported by the global recovery, rising incomes and agricultural prices, Arkhom said, adding the board assumed borrowing costs would rise a total of 1 percentage point this year so that they exceed the pace of inflation.
The agency raised its consumer-price growth forecast for this year to a range of 2.8 percent to 3.8 percent from the 2.5 percent to 3.5 percent estimated in September. The board said the baht would trade from 29.5 to 30.5 per US dollar this year.
Private consumption rose 3.8 percent last quarter from a year earlier, manufacturing expanded 4.8 percent and total investment advanced 6.4 percent, according to yesterday’s report.
Exports climbed 22.3 percent last month from a year earlier and may gain 15 percent in the first quarter of this year, the Thai commerce ministry said separately.
The Bank of Thailand raised its one-day bond repurchase rate for the fourth time in seven months on Jan. 12, by a quarter of a percentage point to 2.25 percent.
Central bank Governor Prasarn Trairatvorakul said last month the monetary authority needed to raise rates to damp inflation. Consumer prices increased 3.03 percent last month from a year earlier, compared with 3 percent the previous month.
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