BANGKOK • Thailand's economy posted its strongest growth in five years last year, with solid exports and tourism giving the government confidence to maintain the country's growth outlook for this year.
While the economy grew slightly less than expected in the fourth quarter as state spending slowed, resilient exports prompted the government yesterday to raise its outlook for exports, the economy's main engine of growth.
Exporters, however, face tougher challenges ahead from rising US trade protectionism and a strong baht, hovering at four-year highs.
The economy grew a seasonally adjusted 0.5 per cent in October-December from the previous three months, National Economic and Social Development Board (NESDB) data showed, slower than the 0.7 per cent forecast in a Reuters poll and 1 per cent growth in the previous quarter.
On an annual basis, fourth-quarter growth was 4 per cent, lower than a median forecast of 4.4 per cent and the July-September quarter's 4.3 per cent expansion, the fastest annual pace since January-March 2013.
The NESDB maintained its 2018 economic growth forecast at 3.6 per cent to 4.6 per cent, after the economy grew 3.9 per cent last year.
The government raised its 2018 export growth outlook to 6.8 per cent from 5 per cent. Thailand's exports, worth about two-thirds of the economy, jumped nearly 10 per cent last year after years of underperforming its Asian peers.
South-east Asia's second-largest economy has posted better headline growth in the last few years, underpinned by a solid global economic recovery, but it is still far from firing on all cylinders.
Growth remains heavily reliant on exports, and the boost from trade has been slow to percolate into the broader economy. Private investment and consumption continue to lag, restrained by high household debt, and excess industrial capacity remains an issue.
Hoping for more ballast from the domestic economy, Thailand's government has said growth will be driven by fiscal spending and big infrastructure projects.
With inflation subdued, Thailand's central bank is expected to keep interest rates unchanged near record lows for all of this year.