Thailand's economy emerged from its worst recession in 11 years in the second quarter, growing 2.3 percent from the first quarter as manufacturing rebounded, adding to signs of recovery in Asia's export-reliant economies. But state officials and economists said political uncertainty could impede the recovery by continuing to squeeze tourism, which has a knock-on effect on private consumption, and they expected the central bank to hold off on further interest rate cuts.
"Exports showed signs of improvement but politics remains a factor of concern that could affect investment confidence. This is reflected by private investment which has not improved much," said Ampon Kittiampon, head of state planning agency National Economic and Social Development Board (NESDB). "But the Thai economy should have passed the worst of its contraction.
Both consumption and investment started to turn positive in the second quarter in line with the recovering global economy," he told a news conference. Thai household consumption rebounded 0.8 percent, seasonally adjusted, in the second quarter from the first, after contracting 3.4 percent in January-March.
The June quarter growth, which followed a 1.8 percent contraction in the previous quarter, was in line with a Reuters poll of six economists who had forecast median seasonally adjusted gross domestic product growth of 2.3 percent Thailand's $260 billion economy contracted 4.9 percent in the second quarter from a year earlier after a 7.1 percent fall in the first, the data showed. Ampon said he expected annual growth to return in the fourth quarter by 2 to 3 percent.
Manufacturing rebounded, rising 6.2 percent seasonally adjusted after a 6.6 percent contraction in the first quarter. Exports of goods and services fell by 4.3 percent, improving from a first-quarter drop of 6.9 percent, seasonally adjusted.
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