BANGKOK, May 15 — Thailand’s economy expanded faster than expected in the first quarter due to a recovery in tourism, data showed on Monday, while investors braced for political uncertainty after the opposition secured a stunning election victory on Sunday (May 14).
The tourism-reliant economy’s recovery has lagged behind its regional peers due to Covid-19 but gathered steam in recent months as Chinese visitors returned. The revival of the sector, which accounts for 11 to 12 per cent of its gross domestic product (GDP), is expected to help offset the impact of declining exports.
Thailand’s state planning agency reiterated its outlook for a 2.7 per cent to 3.7 per cent GDP growth in 2023, versus 2.6 per cent last year, saying the post-election atmosphere should be kept positive to build investor confidence.
Southeast Asia’s second-largest economy grew 2.7 per cent in the January – March period from a year earlier, versus a 1.4 per cent growth in the previous quarter, data from the National Economic and Social Development Council (NESDC) showed.
On a quarterly basis, GDP rose a seasonally adjusted 1.9 per cent, from a revised 1.1 per cent contraction in the fourth quarter of 2022.
Economists in a Reuters poll had expected GDP to expand 2.3 per cent year-on-year in January – March and 1.7 per cent quarter-on-quarter.
The data, however, failed to lift the stock market which dropped as much as 1.3 per cent in early trade due to concerns over political uncertainty and policy pledges after the election. The baht pared earlier gains.
Thailand’s political heavyweights were set for an intense round of deal-making on Monday after the election that delivered big gains for the opposition over parties allied to the military but with no clear indication of alliances taking shape.
“What needs to be done as quickly as possible is the formation of a stable government that will quickly continue policies that support businesses and the people,” said Chaichan Chareonsuk, chairman of the Thai National Shippers’ Council.
Several analysts echoed the view, saying investors were likely to stay on the sidelines as they wait for a new government and clarity on its policies.
“Until political clarity is attained, the private sector will wait and see before deciding to invest, especially with the concerns of pledges to raise the minimum wage,” said Kobsidthi Silpachai, head of capital markets research of Kasikornbank.
Meanwhile, the NESDC maintained its forecast for 2023 foreign tourist arrivals in Thailand at 28 million.
The country beat its tourism target in 2022 with 11.15 million visitors. Pre-pandemic 2019 saw a record of nearly 40 million foreign tourists, who spent 1.91 trillion baht (RM252 billion).
The NESDC also kept its 2023 forecasts for goods exports to drop 1.6 per cent and headline inflation to be between 2.5 per cent and 3.5 per cent.
— Reuters
