Thailand's economy grew 2.0 percent in the first quarter from the previous three months due to strong exports and a steady rise in consumer spending, data showed on Monday, reinforcing expectations of a June interest rate rise to curb inflation.
Southeast Asia's second-largest economy accelerated from 1.3 percent growth in the December quarter and has firmly bounced back from mid-2010 weakness when it contracted for two straight quarters amid weeks of deadly political unrest. The 2.0 percent growth, adjusted for seasonal factors, was in line with a Reuters survey of 13 economists. From a year earlier, Thailand's economy grew 3.0 percent, slightly ahead of economists' expectations of 2.5 percent.
Other Southeast Asian countries have posted solid first-quarter growth. Indonesia grew 6.5 percent in the first quarter from a year earlier, while Malaysia expanded 4.6 percent. But as Asia rebounds from the global crisis, price pressures are intensifying, keeping central banks under pressure to tighten policy further and risk some slowdown in growth. Indonesia, the Philippines, Malaysia, South Korea and India have all raised rates from record lows, albeit at different paces.
Thailand's central bank, one of Asia's most hawkish, is likely to raise its benchmark one-day repurchase rate again at its next meeting on June 1 after six increases since July last year to tame rising price pressures. The baht was steady at 30.35/43 per dollar at 0640 GMT while bond yields were largely steady or a little higher, with the benchmark five-year bond up two basis points at 3.55 percent, as a further rate was already widely expected.
The stock market was down 1.23 percent at the midsession break as external factors dampened sentiment. "Thai stocks fell today to discount growing concerns about the unresolved eurozone debt problems, which are turning investors away from risk assets, including stocks globally," Sukit Udomsirikul, head of strategist at SCB Securities, said.
The National Economic and Social Development Board (NESDB), which compiles the GDP data, maintained its projection the economy would grow between 3.5 and 4.5 percent this year - in line with the 4.1 percent projected by the central bank and a consensus 4.4 percent expected by economists.
"The considerable growth momentum would give comfort to a hawkish central bank that continues to be very keen to normalise its policy rate further, with a 25 basis point hike on June 1 looking rather certain now," said Wellian Wiranto, an economist at HSBC in Singapore. The NESDB forecast the Bank of Thailand's policy rate would be 3.5 percent by year-end, up from a current 2.75 percent and above the average 3.25 percent forecast by economists in a Reuters survey after the April central bank meeting.