Thailand economy: Robust domestic demand boosts growth
Thailand's economy grew more than
forecast in the April to June period helped by domestic consumption and
continued recovery in manufacturing.
Growth
was 3.3% in the second quarter, compared to the previous three months. Analysts
had forecast growth of 1.7%.
Thailand
has taken various measures to boost domestic demand to help recover from last
year's devastating floods.
Analysts
said the steps had helped offset a decline in global demand for exports.
"Thailand
is one of the more resilient economies compared with its Asian peers with
regards to the risk and headwinds from the US and Europe," Philip Wee of DBS
bank told the BBC's Asia Business Report.
Compared
with the same period last year, the economy grew by 4.2%.
Sustainable growth?
Thailand
was hit by some of the worst flooding in decades late last year. This led to
various factories being shut and production suspended, which in turn hit the
country's exports and manufacturing sector.
The
government has announced plans to spend 2tn Thai baht ($63.4bn; £40bn) on
infrastructure projects in an attempt to prevent such disasters and also to
boost growth.
At
the same time, it has also pledged to raise minimum wages in the country.
Analysts
said that while these steps were likely to contribute further to growth,
Thailand needed to be careful that such measures did not increase both debt and
consumer prices rapidly.
They
said that if not checked, such developments may prove to be detrimental to
growth.
"We
have seen in other countries in Asia... if they embark on domestic demand driven
growth, they have to watch for risk in terms of whether this growth is driven by
twin deficits and does this lead to inflation," Mr Wee said.
"If
it does, then it becomes unsustainable."
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