BANGKOK (Bloomberg): Thailand’s economy grew better-than-expected in the first quarter, fuelled by tourism and private consumption, easing the pressure on the central bank to respond to the government’s call for lower borrowing costs.
Gross domestic product in the three months through March increased 1.5% from a year earlier, the National Economic and Social Development Council said Monday.
While that’s slower than the 1.7% pace in the fourth quarter, it was well above the 0.8% median estimate in a Bloomberg survey. Only one analyst correctly predicted the print, while the rest expected the slowest expansion since the end of the pandemic.
Quarter-on-quarter, the economy expanded 1.1% compared with a median estimate for 0.6% growth. GDP contracted a revised 0.4% in the October-December period. The baht was up 0.1% against the dollar after the data, poised to extend a four-day rally.
Private consumption jumped 6.9% year-on-year in the first quarter, offsetting a 2.1% decline in government spending. according to the data release.
The better-than-forecast GDP data may ease pressure on Bank of Thailand to cut borrowing costs that are at a decade-high.
The data comes as tensions between the government and the central bank appear to have cooled after Finance Minister Pichai Chunhavajira last week said they would leave the monetary decision-making to the BOT, explaining that access to lending and liquidity were more important than the level of borrowing costs.
The central bank’s policy rate has stood at 2.5% since September even as consumer prices slipped into negative territory in the fourth quarter of 2023 and GDP growth stuttered.
Headline inflation finally quickened in April, showing the first gain in the past seven months. The BOT said last month that holding the rate steady had given it "policy optionality” to deal with currency volatility, geopolitical risks and uncertainty around the Federal Reserve’s pivot to easing.
South-East Asia’s second-largest economy is expected to pick up pace in the second half, supported by public spending after the much-delayed passing of the national budget.
The government is targeting to roll out the $14 billion cash handout later this year to boost consumption. Critics have warned this could fan inflation and set back fiscal consolidation.
-- ©2024 Bloomberg L.P.
