Thailand Posts Strong Growth on Consumption
Thailand's economy grew a robust 3.6 percent in the fourth quarter from the previous three months, taking the 2012 pace to 6.4 percent, which makes most economists more convinced the central bank will leave its policy on hold this week.
Fourth-quarter growth was stronger than July-September's revised, seasonally-adjusted 1.5 percent, reflecting how domestic demand remained firm a year after devastating flooding in late 2011.
On an annual basis, economic growth in the fourth quarter was a record 18.9 percent, compared with 15.4 percent in the Reuters poll. A high figure was expected because of the severe economic damage from the flooding in the last three months of 2011.
For October-December, the Reuters poll had forecast quarter-on-quarter growth of 0.2 percent.
Thailand's planning agency put full-year growth at 6.4 percent, compared with 0.1 percent in flood-battered 2011.
For 2013, the National Economic and Social Development Board (NESDB) maintained its previous forecast of 4.5-5.5 percent. Economists polled by Reuters have predicted growth of 4.7 percent this year.
The strong growth data comes at a time exporters and the Thai government have been concerned about the strength this year of the baht, which has appreciated about 2.5 percent against the dollar.
After release of the GDP data, the baht recovered from a small loss earlier on Monday and stood at 29.86 to the dollar.
Holding Fire Again?
The Bank of Thailand's policy committee, which surprisingly cut rates in October, has left the benchmark rate unchanged at its last two previous meetings. Most economists expect it hold fire again on Wednesday, although government pressure to cut the rate has increased speculation for further easing.
Gundy Cahyadi, economist at OCBC Bank in Singapore, said how exports fare in the first quarter will be "crucial for sentiment among manufacturers locally."
He noted that political pressure on the central bank to cut rates remains strong but it must be careful about price pressures after the solid fourth-quarter GDP numbers and how 2013 headline inflation is now seen to be slightly higher at 3.2 percent.
Thailand, Southeast Asia's second largest economy, is the latest country in the region to report solid economic growth for 2012 in spite of the weak global economy.
Indonesia, the largest, reported full-year growth of 6.2 percent while the Philippines posted 6.6 percent.
Thailand, like some others, was hurt by weak exports but buoyed by robust domestic consumption - which makes up about half of the economy and strong investment. However, both slowed following an acceleration in spending on reconstruction and replacement equipments in the months after the floods.