Thai economic growth in the second half is expected to outpace the first half's rate, underpinned by a recovery in domestic demand, says a senior official at the Bank of Thailand.
"We [the Bank of Thailand] expect the Thai economy to grow better in the second half of this year from a stronger recovery in the domestic economy," said Don Nakornthab, senior director in the macroeconomic and monetary policy department at the central bank.
In the first five months of the year, Thailand's external front grew stronger than central bank expectations, reflected in higher-than-expected merchandise exports value and tourist arrivals, especially Chinese tourists, he said.
A review of the country's economic growth forecast will be discussed at the Monetary Policy Committee meeting next Wednesday.
Mr Don said merchandise exports, which grew around 7% on a balance-of-payments basis in the period, are expected to slow down in the second half because of high-base effects from last year.
For the first five months, private consumption grew in line with central bank expectations, while private investment remained tepid.
"Investment in construction remained a main drag for private investment, but we expect more spending through government infrastructure projects in the second half to support the recovery," Mr Don said.
He said improving purchasing power abroad will also support growth in investment, while domestic purchasing has not yet fully recovered.
The Bank of Thailand estimates that private investment will grow 2.4% this year and GDP will grow 3.4%.
In related news, Mr Don said the Thai economy continued to expand in May, while merchandise exports continue to grow in almost all products.
On a balance-of-payments basis, Thai merchandise exports totalled US$19.8 billion (673 billion baht) in May, up 10.6% year-on-year. Without gold exports, the value was $19.6 billion, up 14.1%.
In May, the value of merchandise imports grew by 18.2% year-on-year, or 17.9% excluding gold, driven by imports of raw and intermediate materials to support the recovery in exports.
Tourist arrivals were recorded at 2.6 million in May, up 4.6% year-on-year, which was attributed to the faster-than-expected recovery of Chinese tourists after the recent crackdown on illegal tour operators.
Mr Don said government capital spending declined in May as a result of construction projects conducted by the Department of Highways in earlier periods.
In May, private investment indicators decreased by 0.5% year-on-year, deteriorating from a 0.4% contraction recorded in April, according to central bank data.
The contraction of private investment was due primarily to a continued decline in construction activity, which was partly due to a lack of crowding in from decreased government capital spending, Mr Don said.
Private consumption indicators expanded by 2.4% year-on-year, up from 1.9% growth in April, mainly due to increased spending on the services sector, including the recovery in spending on semi-durable goods.
However, spending on consumer goods remained sluggish as seen by a 2.3% contraction in the non-durable index, widening from a 1.2% contraction in April, Mr Don said.
Headline inflation continued to fall to -0.04% in May from 0.4% recorded in April, due to a decline in fresh food prices, while the seasonally adjusted unemployment rate remained unchanged from the previous month at 1.2%.
Meanwhile, the Office of Industrial Economics said the average of the Thai manufacturing production index (MPI) for the first five months this year hit its highest point in 14 months, largely because of strong demand in various industries, notably electronics and rubber.
The May MPI index rose by 1.4% to 115.02 and the MPI for the first five months rose 0.2%, according to OIE director-general Verasak Supprasert.
He attributed the growth to the continued global economy recovery that eventually helped spur Thailand's economy and industry sector.
Electronics went up 9.2% year-on-year on the growing demand for semiconductors for the Internet of Things, he said.