Thailand’s economy showed signs of a turnaround with its fastest quarterly growth this year, as the military government’s stimulus spending and a rise in tourist arrivals offset weak local demand and exports.
GDP expanded 1 percent in the three months through September from the previous quarter, the National Economic and Social Development Board (NESDB) said in Bangkok yesterday. That compares with the 0.6 percent median estimate in a Bloomberg News survey of 20 analysts. GDP climbed 2.9 percent from a year earlier, more than the median forecast of 2.5 percent in a separate survey.
“There are reasons to think the economy’s recovery has further to run over the coming quarters,” Capital Economics Ltd’s Singapore-based Asia economist Krystal Tan said in a note.
While the recovery is unlikely to be as strong as some analysts expect, the nation’s budget that began at the start of last month includes a 20 percent year-on-year increase in public investment, while an improvement in global conditions should support exports, she said.
Prime Minister Prayuth Chan-ocha is seeking to accelerate spending on railways, roads and checkpoints to boost border trade with neighboring nations as faltering overseas sales of Thailand’s disk drives and automobiles subdues Southeast Asia’s No. 2 economy.
The central bank this month kept its key interest rate unchanged for the fourth straight meeting as it waits to assess whether the stimulus would succeed in boosting local demand.
“Fiscal policy is probably the most effective tool at the moment,” said Tim Leelahaphan, a Bangkok-based economist at Maybank Kim Eng Securities Thailand Pcl. “We have to see very, very weak data points in order to justify another cut, but we are not going to see that because in the final quarter it is to be much better than the third quarter as some stimulus policies are implemented.”
The benchmark SET Index of stocks fell 0.6 percent after the report, paring earlier losses.
Accelerating government spending and a gradual recovery of the global economy and export prices are to support the economy next year, NESDB secretary-general Porametee Vimolsiri said in a briefing.
Spending and tax benefits from government stimulus packages would also help, with the government planning to spend 359 billion baht (US$10 billion) during last month and this month from six stimulus measures, he said.
“Tourism remains our hero,” Porametee said.
Even with the short-term impact from the deadly Bangkok bombing, tourist arrivals last quarter totaled 7.3 million, rising 24 percent from a year earlier, he said.
“If things go as we expect, the economy would continue to recover this year and next,” he added.
The agency predicts GDP growth this year is to be 2.9 percent, the fastest in three years.
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