(Recasts with details, reaction)
By Vithoon Amorn
BANGKOK, Feb 28 (Reuters) - Thai industrial production expanded at its fastest pace for three years in January, powered by a robust export sector and strong domestic consumption, the Bank of Thailand (BOT) said on Friday.
Thai consumers, shrugging off worries over a looming Gulf war, have been on a shopping spree for most of the last year, buying cars, homes and other high value items.
Exports surged 25 percent from a year earlier in January, while the manufacturing production index (MPI) rose 13.0 percent, the central bank said.
Analysts polled by Reuters this week had expected double-digit export growth for the fifth straight month in January, with an average forecast of an 18.0 percent rise from a year ago after 10.3 percent growth in December. The poll predicted a 12 percent rise in the MPI.
The BOT's chief economist Atchana Waiquamdee told reporters the steep export rise in January was broad-based, but accentuated by a relatively sluggish performance in January 2002.
"Economic stability was strong on both the domestic and external fronts. Core inflation remained low, and employment conditions continued to be favourable," the central bank said in a statement.
BENIGN INFLATION
Core inflation, excluding price changes for energy and fresh food, rose only 0.4 percent year-on-year in January.
"The numbers are rather good," said Thanomsri Fongarun-rung, economist at Merrill Lynch Phatra Securities. "The trade figures are still okay."
The BOT's Atchana said higher oil prices raised total January imports by 19.8 percent from a year ago and narrowed the trade surplus to $34 million from $421 million for December.
Thailand relies on imported oil for nearly two-thirds of its total energy consumption.
Exports have fared better than market expectations since the third quarter of 2002, despite concerns they would be hurt by uncertain global trade prospects, rising oil prices and the possibility of a war in Iraq.
The central bank also said local motorcycle sales surged 60.6 percent year-on-year in January. It said most Thai factories were busier, running at an average 63.6 percent of installed capacity, against 55.6 percent in the same month a year ago.
The Thai finance ministry on Friday raised its economic growth forecast for 2002 to more than 5.0 percent from 4.9 percent previously and compared with 1.9 percent growth in 2001.
Car sales data also suggest the consumer boom shows no sign of abating.
Toyota Motor Corp , which compiles statistics for the auto industry, said total Thai vehicle sales soared 52.7 percent in January from a year ago after December's 32.6 percent rise.