BANGKOK: Thailand’s economy grew by a more than expected 3.2 percent in the first quarter off the back of strong tourism and public spending, official figures showed Monday, but analysts warned the solid start was still shaky.
Once one of Southeast Asia’s most vibrant and successful economies, Thailand has struggled with lackluster growth fuelled by more than a decade of political instability and slowing demand for its exports.
Thailand’s generals, who seized power in a May 2014 coup, have struggled to fulfil their pledge to kickstart the economy, which is also hampered by high household debt and low consumer spending.
The country’s vital farming sector has been hit hard in recent months by one of the worst droughts in decades.
But figures released by the National Economic and Social Development Board (NESB) on Monday showed the junta’s spending drive, a stimulus package worth some $11 billion since last year, was starting to pay dividends.
The quarter one growth rate of 3.2 percent was the highest in more than two years and higher than the 2.8 percent median estimate from a Bloomberg News survey of 21 analysts.
The NESB also slightly revised their yearly growth rate to a more confident bracket of between 3 percent and 3.5 percent.
Nonetheless Thailand still boasts one of the most disappointing growth rates in the region. Tourism accounted for nearly all of last year’s 2.8-percent growth.
Since coming to power Thailand’s generals have crushed dissent but the economy remains their Achilles heel.
Analysts say prolonged failure to grow the economy could see the junta eventually lose support among Bangkok’s influential middle-class, many of whom supported the 2014 coup.
“High household debt and continued political uncertainty are likely to drag down growth again over the coming quarters,” Krystal Tan of Capital Economics, said in a briefing note.
Downside risks, Tan said, included prolonged drought if the monsoon rains fail and an upcoming referendum in August on a controversial junta-crafted constitution which “could trigger another flashpoint in the country’s long-standing political crisis.”