But with exports expected to shrink for a fourth year running and consumption crimped by high household debts and the worst drought in a decade, economists say more fiscal stimulus and lower interest rates may be needed to prevent growth momentum from stalling.
Southeast Asia's second-largest economy grew a seasonally adjusted 0.9 percent in the first quarter, boosted by government spending and tourism, the National Economic and Social Development Board (NESDB) said on Monday. The pace was faster than 0.8 percent in the fourth quarter and 0.6 percent forecast in a Reuters poll.
From a year earlier, growth was 3.2 percent, better than 2.8 percent previously and higher than economists' estimates.
Thailand's economy remains fragile two years after a military coup ended months of political unrest as its main growth engines - exports and domestic demand - remain weak.
"Thailand's economy got off to a solid start to 2016, but high household debt and continued political uncertainty are likely to drag down growth again over the coming quarters," said Krystal Tan, economist at Capital Economics based in Singapore.
The NESDB expects exports to shrink 1.7 percent this year, versus 1.2 percent growth it predicted earlier. Accounting for about two-thirds of GDP, exports have fallen in the past three years due to tepid global demand and China's slowdown.
Easier Policies
Despite the upside surprise in GDP, the Bank of Thailand could still cut rates if growth falters, economists say.
"With likely subtrend growth momentum and baht outperforming regional currencies, we do not think one can rule out another rate cut by the BOT later this year," said Santitarn Sathirathai, senior economist at Credit Suisse in Singapore.
The BOT held rates steady last week but saw higher risks to growth from slowing consumption and investment.
The NESDB revised its 2016 GDP growth forecast to 3.0-3.5 percent from 2.8-3.8 percent. Growth last year was 2.8 percent.
Tourism and fiscal spending will underpin growth this year, while expected mid-year rains should ease drought, NESDB head Porametee Vimolsiri told reporters.
In a bid to spur domestic activity, the junta has ramped up investment and launched stimulus measures, although big infrastructure projects have been slow to get underway.
In January-March, government investment rose 12.4 percent on year while private investment grew 2.1 percent.
Tourism, accounting for 10 percent of GDP, has been a rare bright spot. Anti-Chinese sentiment in Taiwan and Hong Kong have resulted in more Chinese tourists for Thailand.
Tourist numbers in the first quarter jumped 15.5 percent, and the NESDB predicts a record 33 million visitors this year.
"It's the case of more Chinese who travel to Taiwan coming to Thailand, maybe about 5 percent more," Vichit Prakobgosol, president of CCT Group told Reuters. The group brought in 300,000 Chinese tourists last year.