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 of SARS-CoV-2.
GDP during the October-to-December quarter rose 1.9 percent from a year earlier, the Thai National Economic and Social Development Council said yesterday.
That beat the median growth estimate of 0.8 percent in a Bloomberg survey, and compares with the prior quarter’s revised 0.2 percent contraction.
Photo: Bloomberg
The council maintained its 3.5 to 4.5 percent GDP expansion outlook for this year, while raising its headline inflation forecast to 1.5 to 2.5 percent, from 0.9 to 1.9 percent it forecast in November last year.
Growth this year would be supported by rising demand as COVID-19 pandemic restrictions ease and vaccinations continue, as well as a recovery in the tourism sector, government spending and external demand amid continued global growth, council secretary-general Danucha Pichayanan told a briefing, adding that inflation would be a key pressure this year.
As part of its “living with COVID” strategy, Thai Prime Minister Prayuth Chan-ocha’s government has gradually relaxed restrictions to boost the economy, which had the slowest growth in Southeast Asia last year. Rising price pressures — which last month exceeded the central bank’s inflation target for the first time since April last year — and the Omicron wave have raised concerns about the recovery this year.
The economy grew 1.6 percent last year, rebounding from a revised 6.2 percent contraction in 2020. Economists had forecast 1.2 percent growth last year.
On a seasonally adjusted basis, GDP rose 1.8 percent in the fourth quarter from the previous three months, when it fell a revised 0.9 percent, the council said.
The consumer price index rose 3.23 percent last month, above the Bank of Thailand’s 1 to 3 percent 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 percent forecast.
A tourism revival might help jump-start the economy after the government reopened the country’s borders in November last year. 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 last year was a fraction of the 40 million in 2019, when the tourism industry generated revenue of more than US$60 billion.
“The pace of Thailand’s economic recovery over the coming year will largely depend on how quickly tourists return,” Capital Economics Ltd senior Asia economist Gareth Leather said in a note. “While we expect a sustained recovery in the tourism sector to get underway this year, arrivals will still be far fewer than pre-pandemic, meaning the overall economic recovery will remain weak.”
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