BANGKOK (Reuters): Thailand's economy grew faster than expected last quarter, prompting the government to raise its 2026 outlook and bolstering hopes for a gradual recovery despite lingering economic challenges.
Gross domestic product grew 2.5% in the October-December quarter from a year earlier, boosted by stronger domestic demand and investment, the National Economic and Social Development Council (NESDC) said on Monday.
That outstripped annual growth of 1.2% in the September quarter and beat a median forecast of 1.0% growth in a Reuters poll.
Quarter-on-quarter, Southeast Asia's second-largest economy expanded by a seasonally adjusted 1.9% - the most in four years - rebounding from a 0.3% contraction in the previous quarter and outpacing forecasts for 0.3% growth.
The Thai stock market surged following the data, with the benchmark SET Index up over 1% to reach its highest level since December 2024.
The NESDC raised its 2026 growth outlook to 1.5% to 2.5%, from an earlier projection of 1.2% to 2.2% growth. The Thai economy expanded 2.4% in 2025.
FINANCE MINISTER EYES 3% GROWTH
Finance Minister Ekniti Nitithanprapas said the stronger-than-expected growth was a testament to government stimulus measures.
"This patient has been out of the ICU today," he told reporters.
"We are confident that the economy will grow at least 2% this year," he said. "I want it to grow by 3%, in line with the country's potential."
Lagging regional peers since the pandemic, the Thai economy has faced multiple headwinds, including U.S. tariffs, high household debt and a strengthening baht.
Shivaan Tandon, Asia economist at Capital Economics, said in a research note that he doubted the economic momentum would persist this year.
"Although the recent election outcome should reduce near-term political risk, it does little to improve an otherwise challenging economic outlook," Tandon said.
"We doubt fiscal policy will provide sustained support as authorities remain committed to tight fiscal targets."
Prime Minister Anutin Charnvirakul's Bhumjaithai Party won the most seats in this month's general election, and last week announced a coalition with the Pheu Thai Party.
Anutin's strong government could offer relief to an economy that has faced repeated episodes of political instability, though reviving growth remains a challenge.
Ekniti said last week that the incoming government would continue the economic policies it pledged during the election campaign.
Thailand's stock index has risen about 14% so far this year as investors expressed optimism about the prospects for economic stimulus.
"A swift government formation would help speed up the budget so there can be injections into the economy," the NESDC's head, Danucha Pichayanan, told a news conference.
For 2026, the NESDC projects that exports, a key driver of Thai growth, will rise 2.0%.
It estimates foreign tourist arrivals will recover to 35 million this year, although that is well short of the record of nearly 40 million visitors in 2019, before the pandemic.
(Reporting by Orathai Sriring, Kitiphong Thaichareon, Chayut Setboonsarng; Editing by John Mair, David Stanway and Kevin Buckland) -- Reuters
