Thailand's economy races ahead

Workers in Thailand pictured next to containers filled with rice.

HONG KONG (CNNMoney)

Thailand's economy expanded rapidly in the fourth quarter, with the government reporting gross domestic product growth of 18.9% compared to the previous year.

The eye-popping growth figures are rooted in misfortune, as Thailand experienced crippling floods in late 2011 that depressed production and consumption.

But even with the lower baseline caused by the natural disaster, Monday's data suggests that Thailand's recovery is more robust than previously thought.

Economists had expected much slower growth of around 15% for the quarter -- a consensus that now appears conservative.

Su Sian Lim, an economist at HSBC, attributed the growth to better-than-expected gains in private consumption and net exports.

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There are more indicators that suggest the growth is for real.

Compared to the third quarter, a more recent benchmark, the economy expanded by a very rapid 3.6%. And the government said Monday that full-year GDP growth in 2012 was 6.4%.

The massive floods in 2011 killed hundreds of people and caused damage worth billions of dollars. The country is a regional manufacturing hub, and is especially important for the auto and electronics sectors.

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HSBC's Lim said the country's central bank is now less likely to cut rates later this week -- a strategy that some government officials have advocated in a bid to boost the economy.

"With growth this strong, it is difficult to make a case for more policy accommodation, no matter what the government may say about the need to compress interest rate differentials and keep [the baht] from strengthening," Lim said.

Rate cut or no, Thailand is projected to keep its momentum. The government forecasts growth of 4.5% to 5.5% for 2013, a number in line with private forecasts.

First Published: February 18, 2013: 3:56 AM ET

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