Thai economy grows at fastest pace in over four years in Q2, full-year outlook raised

 Tourism and exports boosted Thailand's economy in the second quarter.
Tourism and exports boosted Thailand's economy in the second quarter.PHOTO: ST FILE

BANGKOK (REUTERS) - Thailand's economy grew at its fastest pace in over four years in the second quarter, led by stronger exports and a boost from the tourism and agricultural sectors, suggesting the recovery is gaining momentum.

The government also raised its forecasts for economic growth and exports for this year, but South-east Asia's second-largest economy faces risks from rising global trade protectionism, an expected slowdown in China and a strong baht currency.

Thailand joins a host of other countries in Asia, including major economic powers China and Japan, as well as Singapore, Malaysia and Taiwan, which have seen growth speed up as an upturn in global demand hoovered up the region's electronics, cars, home appliances and other consumer goods.

Gross domestic product (GDP) grew a seasonally adjusted 1.3 per cent in the June quarter from March, the National Economic and Social Development Board (NESDB) said on Monday (Aug 21).

The pace was faster than the 1 per cent forecast in a Reuters poll and matched the March quarter's pace.

On a yearly basis, growth was 3.7 per cent, the fastest rate in more than four years, and easily beating the median forecast of 3.2 per cent and the 3.3 per cent pace clocked in January-March.

"We expect growth to remain relatively strong over the next couple of quarters, helped by strong external demand and loose monetary and fiscal policy," said Gareth Leather, senior Asia economist at Capital Economics.

The planning agency raised its 2017 economic growth forecast to 3.5-4 per cent from 3.3-3.8 per cent projected earlier, after last year's 3.2 per cent expansion.

It upgraded its export growth outlook to 5.7 per cent from 3.6 per cent. Exports, worth about two-thirds of the economy, have started recovering in 2017 after years of weakness.

NESDB chief Porametee Vimolsiri told reporters the baht's strength has not hurt exports as global growth remains high.

Private investment has remained weak for more than four years while high household debt has crimped consumption and there is a risk that tighter credit rules may curb spending even more.

Thailand's economic growth has lagged its regional peers since 2014, when the army seized power to end months of political turmoil. The junta has ramped up spending in a bid to boost growth, but big-ticket infrastructure projects have been slow getting off the ground.

The government has said it will hold an election later next year, although no dates have yet been set.

"The uncertain political situation is the main risk to the outlook," Capital Economics' Leather said.