Thailand’s GDP beats estimates in Q4

Tourism revival:
The 1.9 percent growth beat forecasts of a 0.8 percent increase as the government tries to boost the economy by easing virus restrictions

Thailand’s economy grew faster-than-expected last quarter, driven by rising exports and tourist arrivals, solidifying its recovery as it faces risks this year from inflation and the Omicron variant of SARS-CoV-2.

GDP grew 1.9 percent year-on-year in the October-December quarter, 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 to the revised 0.2 percent decline in the previous quarter.

The council kept its growth forecast of 3.5-4.5 percent of GDP for this year, while raising its forecast for headline inflation to 1.5-2.5 percent, from 0.9-1.9 percent it said 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 rebound in the tourism sector, government spending and foreign demand amid continued global growth, Council Secretary-General Danucha Pichayanan said in a briefing. Adding that inflation would be a major constraint this year.

As part of its “Living with COVID” strategy, Thai Prime Minister Prayuth Chan-ocha’s government has gradually eased restrictions to boost the economy, which had the slowest growth in Southeast Asia last year. Rising price pressures – which last month surpassed the central bank’s inflation target for the first time since April last year – and the Omicron surge have raised concerns about this year’s recovery.

The economy grew 1.6 percent last year, recovering from a revised 6.2 percent contraction in 2020. Economists had forecast growth of 1.2 percent last year.

On a seasonally adjusted basis, GDP rose 1.8 percent in the fourth quarter from the previous three months when it contracted a revised 0.9 percent, the council said.

The consumer price index rose 3.23 percent last month, ahead of the Bank of Thailand’s target of 1 to 3 percent.

The central bank, which earlier this month kept its benchmark interest rate at a record low for the 14th straight day, said average headline inflation this year is likely to exceed its forecast of 1.7 percent.

A tourism revival could help boost the economy after the government reopened the country’s borders in November last year. Thailand welcomed 230,497 tourists in December, the highest monthly number since March 2020, at the start of the pandemic.

Still, last year’s total of 427,869 foreign visitors was a fraction of the 40 million in 2019, when the tourism industry generated more than $60 billion in revenue.

“The pace of Thailand’s economic recovery in the coming year will depend largely on how quickly tourists return,” Gareth Leather, chief Asia economist at Capital Economics Ltd., said in a statement. “Although we expect a sustained recovery in the tourism sector to begin this year, arrivals will still be far lower than pre-pandemic levels, meaning the overall economic recovery will remain weak.”