BANGKOK (REUTERS) - Thailand's economy grew more than expected in the second quarter, thanks to solid government and tourist spending, but the planning agency kept its forecast for all of 2016 unchanged as exports are expected to be worse than earlier forecast.
Tourism accounts for 10 per cent of gross domestic product, and there will be some worries about revenue the rest of 2016, after a wave of bombings in resort towns on Friday (Aug 12).
Southeast Asia's second largest economy grew a seasonally adjusted 0.8 per cent in the second quarter from the previous three months, the National Economic and Social Development Board (NESDB) said on Monday (Aug 15).
The pace was slower than the revised 1.0 per cent in the first quarter but above the 0.5 per cent forecast in a Reuters poll.
From a year earlier, growth was 3.5 per cent, better than January-March's 3.2 per cent previously and the highest in 13 quarters. The poll projected 3.2 per cent.
The agency said it believes the latest Thai blasts will not have an big impact on tourism.
The baht hit its strongest level in over a year on the growth report. It gained as much as 0.2 per cent to 34.685 per US dollar, its strongest since July 22, 2015, after the data.
Thailand's trade-dependent economy has struggled to expand and lagged regional peers since the army took power in May 2014 to end prolonged political turmoil.
Domestic demand has been sluggish and exports - worth about two-thirds of GDP - have contracted in each of the past three years due to soft global demand and China's slowdown. High household debt, meanwhile, has restrained consumption.
The NESDB expects the economy to grow 3.0-3.5 per cent this year, unchanged from its previous forecast. But it now predicts exports to shrink 1.9 per cent this year, rather than fall 1.7 per cent.
The Reuters poll saw 3.0 per cent growth in 2016, up from 2.8 per cent last year.
In a bid to spur activity, the junta has introduced stimulus measures and ramped up investment, although big infrastructure projects have been slow to get started.
In April-June, government investment rose 10.4 per cent on year while private investment increased only 0.1 per cent.
Tourist arrivals in the second quarter rose by 8 per cent from a year earlier.
Benjamin Shatil, Asean economist at JPMorgan, said that looking beyond support from tourism and state spending, there's still "a fragile base for activity in the Thai economy.
This points to the possibility of further monetary easing from the central bank if activity softens more noticeably into the second half of the year."