The Asian Development Bank upgraded Thailand's economic growth outlook to 4.2% this year following robust growth of 4.8% in the first quarter but is keeping its forecast for 2019 unchanged at 4.1%, says ADB's outlook supplement report.
The new report said Thailand's first-quarter economic surge was broad-based, with consumption, investment and exports all expanding. Private investment looks to be gaining momentum, expanding by 3.1% because of a rebound in construction investment.
Public investment also picked up, growing by 4%. Export volume continued its rapid expansion, up 5% with strong growth in manufacturing. Private consumption continued to expand at 3.6% as consumer confidence remained high.
On the production side, agriculture and construction rebounded while manufacturing and wholesale/retail trade maintained momentum.
ADB's previous report from April projected Southeast Asia's second-largest economy to expand by 4% in 2018.
The Thai economy in the January-to-March quarter expanded at its fastest quarterly clip in five years to 4.8%, accelerating from 4% growth in the previous quarter. The strong economic growth prompted the government's think tank, the National Economic and Social Development Board, to raise its economic growth forecast to 4.2-4.7% this year from a range of 3.6-4.6% seen in February.
ADB's upgrade is less optimistic than the Bank of Thailand's latest forecast of 4.4% for this year and 4.2% for next.
ADB slightly raised its inflation forecast for Thailand to 1.3% this year and 1.4% next from 1.2% and 1.3%, respectively.
In Thailand, higher global oil prices have contributed to rising headline inflation, but the government's plan to subsidise diesel should help moderate future effects, ADB said.
The Manila-based lender said Southeast Asia continues to be buoyed by robust domestic demand, particularly for private consumption and investment, and is on track to meet its forecasts.
The growth outlook for Southeast Asia remains at 5.2% for both 2018 and 2019, as a downward revision for Indonesia's 2018 outlook counters the upward revision for Thailand. Robust domestic demand, particularly for private consumption and investment, continues to support economies in the region.
Higher public investment boosted first-quarter economic growth in Indonesia, the Philippines and Thailand, while private investment was strong in Vietnam. Growth in exports added a further boost to the economies of Singapore, Thailand and Vietnam, but export growth moderated in Malaysia, ADB said.
Growth in Asia-Pacific's developing economies for 2018 and 2019 is projected to remain solid, despite rising tensions between the US and its trade partners.
ADB's supplement report forecasts 2018 growth for Asia-Pacific at 6% for 2018 and 5.9% for 2019, in line with previous projections. Excluding Asia's newly industrialised economies, growth is forecast at 6.5% in 2018 and 6.4% in 2019, also unchanged from April.
"Although rising trade tensions remain a concern for the region, protectionist trade measures implemented so far in 2018 have not significantly dented buoyant trade flows to and from developing [economies in] Asia," said chief economist Yasuyuki Sawada. "Prudent macroeconomic and fiscal policy making will help economies across the region prepare to respond to external shocks, ensuring that growth in the region remains robust."