Thailand's GDP growth hit a three-year high of 3.2% in the first quarter, thanks to government stimulus measures and rapid improvement in the tourism sector, says the country's economic think tank.
Citing the aggressive deployment of stimulus measures by the government since last September, the National Economic and Social Development Board (NESDB) revised up its projection to a range of 3%-3.5% from 2.8-3.8% estimated in February, said secretary-general Porametee Vimolsiri.
According to the NESDB, the government has carried out 10 stimulus measures with a budget totalling 645 billion baht, of which 518 billion was earmarked for several types of soft loans and the rest went to government spending.
From the fourth quarter of last year until now, a total of 529 billion baht has been spent, with 141 billion going out in the first quarter alone.
"Some 116 billion baht of the existing budget is sufficient to continue the growth momentum throughout the year," Mr Porametee said.
Apart from stimulus measures, the tourism sector still performed strongly in the first quarter, rising 15.5% with 9 million foreign tourist arrivals, he said.
The NESDB expects income generated from tourism to reach 1.68 trillion this year and account for 12% of GDP -- up from 10% in 2015.
Foreign tourist arrivals are expected to hit the new target of 33 million this year, up from the previous projection of 32.5 million.
The NESDB, however, revised down its export forecast due to a weakening of large economies. It now sees a 1.7% contraction after previously predicting 1.2% growth.
Domestic consumption is still feeling the pinch from unfavourable farm income amid the severe drought. The first quarter saw a 1.5% contraction in the agricultural sector.
Meanwhile, the investment budget for infrastructure development will be able to kick off in the third quarter.
According to the Finance Ministry's plan, the government's 20 megaprojects worth 1.7 trillion baht are set to be signed off on this year. Contracts for the first 10 projects are expected to be sealed in the first six months of the year, with the next 10 to be concluded in the following six months.
"Around 50 billion baht will be spent in the second half of this year for construction of those planned infrastructure projects," said Mr Porametee.
The farm sector will be closer in line with rising output on the back of the end of the drought in the second half.
Investor requests for investment privileges from Thailand's Board of Investment in the first quarter increased by 212% to 109 billion baht over the same period last year. Mild growth of 2.1% in private consumption was also registered.
The NESDB further revised up inflation to 0.1-0.6% from the previous range of -0.1-0.9%.
Deputy Prime Minister Somkid Jatusripitak said high growth in the first quarter had tipped the Thai economy into positive territory.
"It is creating confidence in the country among investors and the Thai people," he said. "The economy is expected to recover step by step from now on due to rising momentum from infrastructure projects, tourism and foreign investment," added Mr Somkid.
The Fiscal Policy Office (FPO) believes that the country's economy already passed through its toughest patch in 2014, when growth was recorded at a mere 0.8%.
Although the NESDB has cut its export projection to a 1.7% contraction this year -- more pessimistic than the FPO's projection of -0.7% -- Thailand's exports have not been the world's worst performer, said FPO director-general Krisada Chinavicharana.
Mr Krisada noted that the Commerce Ministry is penetrating into new markets, neighbouring countries in particular, due to their solid growth prospects.
The FPO in late April cut its economic growth forecast to 3.3% this year from 3.7% predicted earlier amid heightening concerns over exports.
He said the government is making great strides with big-ticket infrastructure projects, particularly electric trains in Bangkok and its outskirts.
The FPO hopes such investment in large-scale infrastructure projects will reverberate across the country, giving a boost to the country's economy in the long run, said Mr Krisada.
Pornpen Sodsrichai, the Bank of Thailand's director of macroeconomic and monetary policy, said the first quarter's 3.2% GDP growth reading was similar to the central bank's own assessment of this year's overall economic outlook, even with better-than-expected tourism figures.
"For the remaining three quarters, the base effect [from last year] has to be taken into account as well," she said.
The deputy governor overseeing monetary stability, Mathee Supapongse, agreed that the 3.2% figure announced by the NESDB was similar to the central bank's evaluation.