BANGKOK • Thailand's economy expanded at a slower pace in the April-June period and tourism decelerated, but the state planning agency kept its 2018 growth forecast at 4.2-4.7 per cent and raised its projection for export gains.

Gross domestic product grew a seasonally adjusted 1.0 per cent in the second quarter from the first, the National Economic and Social Development Board (NESDB) said.

The pace met a Reuters poll's 1.0 per cent forecast and was far below January-March's fast quarterly pace, which was revised up to 2.1 per cent from 2.0 per cent.

On a yearly basis, second-quarter expansion was 4.6 per cent, above the poll's 4.5 per cent, but below the first quarter's revised 4.9 per cent, the highest in five years.

The NESDB raised its 2018 export growth forecast to 10.0 per cent from 8.9 per cent seen three months ago as it expects shipments to be underpinned by improving trade partners' economies.

Exports, a growth driver, were strong in April-June, rising 12.3 per cent from a year earlier. But in the quarter, public spending was less than expected and tourism decreased, NESDB deputy chief Wichayayuth Boonchit told a news conference yesterday.

Ms Krystal Tan of Capital Economics said she expects growth "to slow gradually over the coming quarters. On the plus side, the government's infrastructure investment programme is expected to gain momentum".

Growth in South-east Asia's second-largest economy has picked up in the past few years but it is not yet firing on all cylinders, as expansion remains heavily reliant on exports. Domestic demand has lagged, crimped by high household debt while excess industrial capacity remains an issue.

The ruling junta is trying to ramp up spending and big infrastructure projects to spur activity, but disbursement has been slower than expected following stricter procurement rules imposed last year.

In April-June, annual growth in tourist numbers slowed to 9.1 per cent, compared with 15.4 per cent in the previous quarter, while manufacturing growth slowed to 3.5 per cent from 4.1 per cent.

A July boat accident near Phuket that killed dozens of Chinese tourists may reduce visitor numbers from China, Thailand's biggest market, by 669,000, or 13 per cent, to 5.15 million in July-December, according to the tourism ministry.

Thai private consumption rose 4.5 per cent in April-June from a year earlier, while private investment was up 3.2 per cent and public investment increased 4.9 per cent, NESDB data showed.

The Bank of Thailand has left its policy interest rate unchanged at 1.50 per cent, near record lows, since April 2015. But the central bank noted a diminishing need for accommodative monetary policy at its last meeting. It next reviews policy on Sept 19.

REUTERS