Thailand's economy expanded at a slower pace in April-June and tourism decelerated, but the state planning agency kept its 2018 growth forecast at 4.2-4.7% and raised its projection for export gains.
Gross domestic product grew a seasonally adjusted 1.0% 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% forecast and was far below January-March's fast quarterly pace, which was revised up to 2.1% from 2.0%.
On a yearly basis, second quarter expansion was 4.6%, above the poll's 4.5%, but below the first quarter's revised 4.9%, the highest in five years.
The NESDB raised its 2018 export growth forecast to 10.0% from 8.9% 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% 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.
Krystal Tan of Capital Economics said she expects growth to "to slow gradually over the coming quarters. On the plus side, the government's infrastructure investment program is expected to gain momentum."
Growth in Southeast 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.
Bank of Thailand governor strikes hawkish tone as GDP Gains 4.6%
The 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%, compared with 15.4% in the previous quarter, while manufacturing growth slowed to 3.5% from 4.1%.
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%, to 5.15 million in July-December, according to the tourism ministry.
Thai private consumption rose 4.5% in April-June from a year earlier, while private investment rose 3.2% and public investment increased 4.9%, NESDB data showed.
The Bank of Thailand has left its policy interest rate unchanged at 1.50%, near record lows, since April 2015. But the BoT noted a diminishing need for accommodative monetary policy at its last meeting.
It next reviews policy on Sept 19. Some analysts expect no policy change throughout 2018 while others predict a rate hike on continued growth and rising rates in other countries.
The country cannot buck global policy tightening trend but any interest rate hike will be gradual, its central bank governor said on Monday.
The need to continue "very accommodative" monetary policy is lessening, but the timing of a rate hike will be decided by the monetary policy committee, Bank of Thailand Governor Veerathai Santiprabhob told reporters.
"When the economy is clearly recovering, the need for very monetary policy is reducing," he said. "But even there will be some rate hikes going forward ... it will continue to be accommodative monetary policy," he said.
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