Thailand's economic growth softened in the first quarter on tepid private consumption and shrinking exports, says a senior Bank of Thailand official.
Public investment in infrastructure projects is expected to shore up growth in the second half despite external risks and the threat of drought, said Pornpen Sodsrichai, the central bank's director of macroeconomic and monetary policy.
"It was already expected that growth in the first quarter would slow because of [diminished effects from] several stimulus measures that were rolled out in the fourth quarter," she said. "Looking ahead, infrastructure projects, which are expected to commence in the second half and continue into early next year, will provide support [for economic growth]."
The Private Consumption Index (PCI) increased by 2.1% year-on-year last month, down from 2.6% in February, while month-on-month expansion on a seasonally adjusted basis registered at 0.4%, according to central bank data. The PCI expanded by 2% year-on-year in the first quarter, down from last year's fourth-quarter reading of 3%.
Ms Pornpen said the value of merchandise exports excluding gold contracted in the first quarter due to the economic slowdown in China and Asean countries, coupled with lower export prices of petroleum-related products, which contributed to a decline in manufacturing.
Thai shipments fell by 1.4% year-on-year in the first quarter, in contrast to a 7.9% decline recorded in the fourth quarter, according to central bank data.
The Fiscal Policy Office (FPO) predicts GDP growth of 3% year-on-year in the first quarter, in line with the central bank's view, but quarterly growth will ebb as stimulus effects fade, Ms Pornpen said.
According to the National Economic and Social Development Board, the economy grew by 2.8% year-on-year and 0.8% quarter-on-quarter on a seasonally adjusted basis in the fourth quarter of 2015.
The FPO has slashed its forecast for economic growth in 2016 to 3.3% from 3.7% amid concerns over exports, which are projected to decline by 0.7%.
The central bank forecasts full-year GDP growth at 3.1%, with a 2% contraction in exports expected.
Headline inflation is expected to turn positive in mid-year due to diminished high-base effects of oil prices registered in early 2015, said Ms Pornpen.
Thailand's current account registered a surplus in the first quarter, owing to gold exports, high revenue from tourism and a contraction in the value of merchandise imports, she said.
The country's current account surplus was recorded at US$16.4 billion in the first quarter, up from last year's fourth-quarter showing of $10.2 billion.
Meanwhile, the Manufacturing Production Index increased by 1.83% year-on-year in March after two months of contraction, recording a three-year high capacity utilisation rate of 72.49%.
The index declined by 1.1% year-on-year in the first three months, down from an expansion of 0.3% in last year's final quarter.