Thailand grabs spot as 2nd fastest-growing economy in Southeast Asia

Its 4Q GDP growth hit 3.6%.

According to DBS, 4Q GDP growth reached 3.6% QoQ sa (18.9% YoY), significantly above consensus expectations. Taking into account revisions in the preceding quarter, full-year 2012 growth hit 6.4%, making the Thai economy the 2nd fastest in Southeast Asia (behind the Philippines and just ahead of Indonesia). 

Base effects from the floods in 4Q11 played a role towards these numbers, but the acceleration in sequential growth in 4Q should not be understated.

Favorable conditions including low interest rates, low inflation and a hike in minimum wages have encouraged consumer spending, especially in durable goods.

Here's more from DBS:

Meanwhile, investment levels stayed elevated as shown by the construction and machinery investment numbers. External demand is something of a mixed bag with services exports and autos clearly outperforming.

2013 is going to be another strong year. Notably, the drivers for domestic demand – a substantial hike in minimum wages in January, low interest rates and the rice pledging scheme – are still largely in place in 2013.

Only the first car buyer scheme has expired and the production effects will fade in 2Q. For investment, a lot depends on the pace of implementation of the government’s infrastructure plans.