By Orathai Sriring and Kitiphong Thaichareon
BANGKOK, Feb 18 (Reuters) - Thailand's economy grew a much stronger-than-expected 3.6 percent in the fourth quarter from the previous three months, a pace that undercuts government calls for interest rate cuts.
Finance Minister Kittirat Na Ranong has put pressure on the central bank to cut rates both to help exporters and to discourage capital inflows that have pushed up the baht this year. Kittirat said earlier this month that he had written to the Bank of Thailand, which last cut rates in October, to encourage another cut.
Singapore-based Eugene Leow of DBS Bank said domestic demand in Thailand - which had 6.4 percent full-year growth in 2012 - was picking up and this would spill over into this year.
'The rate cut cycle is probably over despite pressure from the government. In fact, the focus will likely turn towards inflation, especially considering the robust growth number,' he said.
Kittirat, pressed by reporters after Monday's data on gross domestic product, declined to comment on his call for lower rates. The baht rose a shade after the news but then fell back to trade at 29.89 per dollar, up around 2.5 percent so far this year.
Economists in a Reuters poll had forecast just 0.2 percent for the quarterly growth.
On an annual basis, economic growth in the fourth quarter was a record 18.9 percent, compared with a forecast of 15.4 percent in the Reuters poll and revised growth of 3.1 percent in the third quarter.
A high figure had been certain because of severe economic damage from flooding in the final months of 2011 that slashed economic growth that year to just 0.1 percent.
For 2013, the National Economic and Social Development Board (NESDB) maintained its forecast of economic growth of 4.5-5.5 percent. Economists polled by Reuters predicted 4.7 percent.
HOLDING FIRE AGAIN?
After its surprise cut in October, the Bank of Thailand's policy committee has left the benchmark rate unchanged at its last two meetings.
Most economists expect it hold fire again on Wednesday, despite the government pressure, because the domestic economy is strong and credit growth is becoming a concern.
'Fourth-quarter GDP was not just the effect of the low base in 2011, but also government stimulus, leading to double-digit growth in both consumption and investment,' said Kampon Adireksombat, an economist with Tisco Securities.
'It's clear from the number that we have less downside risk on growth. We need to monitor price pressures because we've seen some cost-push pressure from higher oil prices as well as more signs of demand-pull inflation,' Kampon added.
The NESDB kept its forecast range for inflation in 2013 at 2.5 to 3.5 percent, but indicated a figure of 3.2 percent, above the midpoint. The central bank has forecast 2.8 percent. Economists generally think it will be higher, some saying as high as 5 percent.
Gundy Cahyadi, an economist at OCBC Bank in Singapore, said the performance of exports in the first quarter would be 'crucial for sentiment among manufacturers locally'.
The government and central bank both expect global trade to pick up as the year progresses.
Thailand, Southeast Asia's second largest economy, is the latest country in the region to report solid economic growth for 2012 in spite of weakness in the global economy last year.
Indonesia, the largest, reported full-year growth of 6.2 percent, while the Philippines posted 6.6 percent growth.
Thailand, like some others, was hurt by weak exports but buoyed by robust domestic consumption, which makes up about half of the economy, and strong investment. However, both slowed a little due to a slackening in spending on reconstruction and the replacement of equipment in the months after the floods.
Exports jumped 18.2 percent in the fourth quarter from a year earlier while manufacturing expanded 44 percent, reflecting low output in late 2011 because of the floods, the planning agency said.
Private consumption rose 12.2 percent in October-December from a year before while private investment surged 21.7 percent.
(Additional reporting by Boontiwa Wichakul and Satawasin Staporncharnchai; Editing by Richard Borsuk and Alan Raybould) Keywords: THAILAND ECONOMY/GDP
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