Thailand’s economy grew at its fastest pace in over a year in the third quarter, as a revival in tourism, increased consumption and a pick-up in private investment boosted growth, but the state planning agency flagged global growth risks ahead.
Southeast Asia’s second-largest economy expanded 4.5% in the September quarter from a year earlier, data from the National Economic and Social Development Council (NESDC) showed on Monday.
That was up sharply from the April-July period and quarterly growth surpassed expectations, reinforcing bets for a rate hike this month.
While third-quarter growth was among the smallest in Southeast Asia, it was the fastest expansion since the second quarter of 2021 and the state planning agency forecast full-year 2022 growth at pre-pandemic levels.
The growth will be mainly supported by tourism, private and public investments, and domestic demand, the state planning agency said in a statement.
The government expected the economy to grow 3.2% this year, at the upper end of a previous forecast range of 2.7% to 3.2%, and saw it rising by 3% to 4% in 2023.
Thailand’s economy has seen a steady recovery since the government lifted all COVID-19 curbs earlier this year, reviving the country’s crucial tourism sector, but the outlook is clouded by risks of slowing global growth and high inflation.
“Key risks include slower-than-expected global economic growth and volatility in global financial markets as major central banks continue to raise interest rates to reduce still high inflationary pressures,” Danucha Pichayanan, head of NESDC, told a news conference.
Third-quarter GDP was smaller than those of many of its regional peers including Indonesia, the Philippines, Malaysia and Vietnam.
Third-quarter growth was in line with expectations for a 4.5% rise in a Reuters poll and marked an acceleration from the 2.5% growth seen in the April-June quarter.
On a quarterly basis, GDP rose a seasonally adjusted 1.2% in July-September, beating expectations for a 0.9% increase, and accelerating from second-quarter growth of 0.7%.
The state planning agency said private consumption rose 9.0% year-on-year in the third quarter, private investment jumped 11%, and Thai tourism receipts soared 1,497% from a year earlier to 158 billion baht ($4.38 billion).
The data reinforced expectations for a modest 25-basis-point rate hike at the Bank of Thailand’s Nov. 30 meeting, as the central bank tries to strike a tricky balance between containing near 14-year high inflation and supporting the fragile recovery. The BOT has hiked rates by 50 basis points since August.
“Thailand’s cyclical rebound has further to run, as the accelerating tourism recovery will help offset headwinds from slowing global trade and rising interest rates,” said Krystal Tan, an economist at ANZ.
“The Bank of Thailand is set to stick with gradual rate hikes as nurturing the recovery will remain a key priority.”
The NESDC expected Thailand to receive 10.2 million foreign visitors this year, up from 428,000 last year, and compared with nearly 40 million in 2019. It expected 23.5 million foreign tourist arrivals in 2023, just over half of pre-pandemic levels.