Thailand’s economy enjoyed record growth in the fourth quarter of last year as industry recovered from the impact of the kingdom’s worst floods in decades, official data showed yesterday.
GDP soared 18.9 percent in the three months through December from the year-earlier period, according to the government’s National Economic and Social Development Board.
GDP rose 3.6 percent compared with the previous quarter.
Strong domestic and international demand helped drive the strong performance, board secretary-general Arkhom Termpittayapaisith said.
“There has been a full recovery after the severe floods,” he told a press conference.
The Thai economy suffered a double-digit contraction in the wake of the months-long floods, which deluged vast swathes of the country in 2011, killing hundreds of people and causing widespread damage to factories. At their height the floodwaters affected 65 of the country’s 77 provinces, swamping hundreds of thousands of homes and disrupting global supply chains.
The board forecasts economic growth of 4.5 to 5 percent for this year, after an expansion of 6.4 percent last year.
“An economic recovery in the United States, China and Europe will be good for Thai exports,” Arkhom said, adding that a hike in the kingdom’s minimum wage would also boost domestic demand.
Rising car sales and production helped lift GDP in the fourth quarter due to a government scheme to encourage new vehicle purchases.
Thailand’s central bank last month held its key interest rate steady at 2.75 percent, citing a better-than-expected performance in the economy. Bank of Thailand Governor Prasarn Trairatvorakul said he was under no pressure even after Thai Finance Minister Kittiratt Na- Ranong renewed calls for easing to cool the baht’s gains.
Keeping rates low for a long time may lead to asset bubbles, Prasarn has said.
Kittiratt, who has repeatedly called for lower borrowing costs, said this month he wrote a letter to Bank of Thailand Chairman Virabongsa Ramangkura, reiterating his view that the rate was luring capital inflows.
Prasarn last week said the rate differential was not the primary reason for rising inflows.
Thailand needs to reduce money supply, which is the main cause of asset bubbles, and not just low interest rates, Kittiratt said yesterday after the data release.
The central bank plans to remove limits on overseas investments by small and medium enterprises, and allow exporters to keep deposits in US dollars to help ease pressure on the baht, he said.