Thailand's economic growth is expected to accelerate in the final nine months of this year, even as the global economy teeters near a recession, thanks partly to a lift following the May 14 election, analysts say.
First-quarter GDP growth of 2.7% year-on-year beat the consensus forecast of 2.3% and accelerated from 1.4% growth in the fourth quarter last year as external demand improved, reflected by exports and a strong recovery of the tourism sector, according to BMI, a unit of Fitch Group.
In seasonally adjusted terms, the economy grew 1.9% quarter-on-quarter in the first three months of 2023, which is a sharp improvement from the 1.1% quarter-on-quarter contraction recorded in the final quarter of 2022, BMI noted.
Export growth rose to a 3% annualised increase in the first quarter, reversing the 0.7% year-on-year decline three months earlier, indicative of a strong recovery in Thailand's tourism sector, BMI stated in its Country Risk and Industry research issued yesterday.
"The latest growth reading of 2.7% year-on-year in the first quarter was a little better than most analysts -- including us -- had expected, but we are holding on to our full-year growth forecast of 3.0% in 2023 for now, given heightened economic and political uncertainty," said the report.
BMI projects the country's real GDP growth to "strengthen over the coming quarters", with a continued recovery in the tourism sector remaining the biggest driver of the economy.
"We expect government spending to pick up following the conclusion of the general election. Weakness in external demand for goods appears to be bottoming out, and we expect mainland China's strong economic rebound will help to mitigate some headwinds stemming from weakness in global demand," BMI noted.
Asia Plus Securities (ASPS) said many economic components improved in the first three months of the year, especially domestic consumption, and these are projected to grow further following the election.
"After the election, the new government is expected to work on its promised policies focusing on people's well being, which should boost the economy while the global economy is at risk of recession," said ASPS's research division.
The new government's policies should allow Thai GDP growth this year to strengthen from the average of 3.5% per year recorded over the past decade (2013-2022), prompting funds to flow into the country's stock market, said ASPS.