First-quarter gross domestic product (GDP) expanded the highest in three years to 3.2 per cent, compared to the previous quarter’s 2.8 per cent.

The country’s economy grew a seasonally adjusted 0.9 per cent in the first quarter, boosted by public spending and tourism, according to the National Economic and Social Development Board (NESDB).

Private consumption rose 2.3 per cent, continuing from the previous quarter’s 2.6-per-cent increase, while public consumption climbed 8 per cent compared to the 4.8 per cent in the fourth quarter of last year.

Given disbursement of investment in rural sectors for roads and water resources management, public investment remained high with a 12.4-per-cent increase.

Pornpen Sodsrichai, the central bank’s director of the Macroeconomic Office at the Bank of Thailand, said that first-quarter economic growth at 3.2 per cent came close to the central bank’s forecast.

The expansion was mainly driven by services, particularly high growth in tourism, and consistent rise in public spending, she said.

However, both internal and external risks particularly weak exports need to be monitored in the next periods while the country’s private spending remained low, she said. Thai exports will depend on the global economic recovery, she said.

In the first quarter of 2016, Thai exports continued last year’s slump, contracting 1.4 per cent. Although exports edged up 1.1 per cent in terms of quantity, the value of the exports dropped 2.4 per cent amid the economic slowdown in Thailand’s trading countries.

Thai gold exports to the United States, the Europe, China and CLMV (Cambodia, Laos, Myanmar and Vietnam) fell 5.1 per cent, although there was an expansion in exports to five other Aseanmarkets and Australia.

The NESDB revised its estimate for this year’s GDP growth to 3-3.5 per cent from 2.8-3.8 per cent. Last year’s growth was 2.8 per cent.

It forecast Thai exports to contract 1.7 per cent for the whole |of 2016. Growth is forecast in |the range of 3-3.5 per cent this year.

The BOT kept its policy rate unchanged last week but saw|higher risks to growth from |slowing consumption and investment.

Nalin Chutchotitham, HSBC’s economist for Thailand, said domestic demand was partly boosted by a series of fiscal stimulus measures introduced since September 2015.

“Based on our calculations, final domestic demand contributed about a 3.6 percentage points to headline GDP growth in the first quarter of 2016, less than the 4.3 percentage points in the fourth quarter of 2015,” she said.

Furthermore, the large contribution to growth from net exports was again due to import contraction while goods exports stayed weak.

Nopporn Thepsithar, chairman to the Thai National Shippers Council, said he foresees greater opportunity for the Thai economy to recover this year and to grow between 3-3.5 per cent, driven by the growth of tourism and investment.

“Key factors to drive the economy this year are tourism and investment in the government’s infrastructure development projects and private investment, which would follow the government’s investment,” he said.

The export sector may slightly help drive GDP growth as Thai shipment has still been affected by the uncertainty in global economic growth, Nopporn added.

Tim Leelahaphan, Thailand economist at Maybank Kim Eng Securities, said the first-quarter figures showed domestic demand was growing but the markets |were too pessimistic about Thai growth.

“We see domestic demand is growing. One could speculate that this was due to the ramping up of production before the great number of holidays in April and May but more data is needed to confirm this,”

“We maintain our above-street view and currently have this year’s growth at 4 per cent, against the market forecast of 3.20 per cent,” he said.