May 26 (Bloomberg) -- Thailand's economy grew 6 percent in the first quarter as the nation's first elected government since 2006 increased confidence and consumer spending.
Gross domestic product in Southeast Asia's second-biggest economy expanded from 5.7 percent in the previous three months, the government said today in Bangkok. The median estimate of 15 economists in a Bloomberg survey was for 6 percent growth.
Prime Minister Samak Sundaravej's government, which replaced the military junta that deposed former leader Thaksin Shinawatra in 2006, aims to achieve 6 percent economic growth this year, partly by spending on trains and buses in Bangkok and irrigation in rural areas. Automotive exports, which helped drive fourth-quarter growth, may slow as global demand eases.
``The government's higher spending on infrastructure projects will increase public and private investments,'' said Mark Mobius, who oversees about $47 billion of emerging market equities at Templeton Asset Management Ltd. in Singapore.
Total investment in the first quarter rose 5.4 percent, accelerating from 4 percent in the previous quarter, today's report showed.
GDP expanded 1.4 percent in the first quarter from the previous three months, when it grew a revised 1.7 percent, seasonally adjusted. That matched the 1.4 percent median estimate of economists surveyed by Bloomberg.
Rising Oil
``First-quarter growth was supported by pent-up local demand,'' said Ramya Suryanarayanan, an economist at DBS Bank in Singapore. ``Rising oil and food prices will hurt the economy in the second quarter but I don't think that will derail growth.''
Finance Minister Surapong Suebwonglee said growth is now cooling as rising oil prices spur inflation and constrain consumer spending. To counter the slowdown, the government has cut taxes, increased spending on infrastructure and given loans to villages.
The Bank of Thailand, which kept its interest rate unchanged on May 21, said it may raise borrowing costs if inflation accelerates.
Consumer prices gained 6.2 percent in April from a year earlier, the fastest pace since 2005. The inflation rate was at 5 percent in the first quarter this year compared to 2.9 percent in the fourth quarter, according to the Commerce Ministry.
Confidence Slips
Consumer confidence fell for the first month in six in April and may drop further as prices increase, Thanavath Phonvichai, an economist at the Thai Chamber of Commerce, said May 15.
Private consumption rose 2.6 percent from a year earlier, after gaining 1.6 percent in the fourth quarter.
Thailand's trade deficit was the widest in 12 years last month because of the higher cost of oil, almost all of which is imported and which has almost doubled in price in the past year. The nation is the second-least efficient user of fuel in Southeast Asia after Vietnam, according to the Tokyo-based Institute of Energy Economics, Japan.
``Rising oil prices may derail recovering local demand,'' said Santi Vilassakdanont, chairman of the Federation of Thai Industries. ``Some companies have suspended their investment plans. Consumers are more cautious about spending and are starting to cut expenses.''
A private consumption index, comprising electricity use, imports of consumer goods and gasoline sales, gained 7 percent in the first quarter, accelerating from 4.2 percent in the previous quarter, according to the central bank. A private investment measure rose to 7.2 percent from 4.1 percent in the fourth quarter, the Bank of Thailand data showed.
Surging Imports
Import growth in the first quarter was 34.5 percent, more than double the prior three months. Overseas purchases will surge 25.5 percent this year, compared with 9.6 percent in 2007, the central bank forecasts.
Growth in exports, which make up 70 percent of the economy, slowed to 21 percent in the first quarter from 24 percent in the previous three months, according the Bank of Thailand. Still, soaring rice prices, which breached $1,000 a metric ton for the first time this month, helped buoy the value of shipments to a record in March.
``Rising prices of agricultural products may partially offset the impact of surging oil prices on local demand,'' said Luz Lorenzo, an economist at ATR-Kim Eng Securities Inc. in Manila.
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