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Thailand economic recovery picks pace in fourth quarter | Thailand economic recovery picks pace in fourth quarter |
(35 minutes later) | |
Thailand's economic growth exceeded expectations in the last three months of 2012 as it continued to recover from the previous year's devastating floods. | Thailand's economic growth exceeded expectations in the last three months of 2012 as it continued to recover from the previous year's devastating floods. |
Gross domestic product surged 18.9% in the October-December period, from a year earlier. Most analysts had forecast a figure close to 15%. | Gross domestic product surged 18.9% in the October-December period, from a year earlier. Most analysts had forecast a figure close to 15%. |
Compared with the previous quarter, the economy grew by 3.6%. | Compared with the previous quarter, the economy grew by 3.6%. |
Analysts said the data may lessen the pressure on the central bank to ease its monetary policies to spur growth. | Analysts said the data may lessen the pressure on the central bank to ease its monetary policies to spur growth. |
"Overall, the Thailand economy is in a pretty good shape right now," Rahul Bajoria, an economist with Barclays Capital told the BBC. | |
"It is unlikely that the central bank will cut rates anytime soon. The numbers clearly indicate that there is no urgent need to do that." | |
Inflation concerns | |
The floods in Thailand had an impact on some of the biggest industrial areas and resulted in many factories being shut. | |
That hurt Thailand's exports, one of the biggest drivers of its economic growth. | |
To make matters worse, a slowdown in demand from key global markets also hurt the export sector. | |
As a result, Thailand's government implemented various steps to help stoke domestic demand in an attempt to offset the decline in exports and sustain growth in the economy. | |
It raised minimum wages in various parts of the country, in some areas by as much as 40%. | |
The government also announced plans to spend 2tn Thai baht ($65bn; £40bn) on infrastructure projects after the devastating floods. | |
For its part, Thailand's central bank, the Bank of Thailand, cut interest rates in October last year, bringing down its key rate to 2.75% from 3%. | |
Analysts said that given the strong domestic demand and increased government spending, a rise in consumer prices remained a concern and may prompt the central bank to keep rates on hold in the short term. | |
"Domestic demand momentum is certainly picking up and this will spill over into 2013," said Eugene Leow of DBS Bank. | |
"The focus will likely turn towards inflation, especially considering the robust growth numbers." |