Thailand's economy expanded more than expected in second quarter

[THAILAND] Thailand's economy grew more than analysts estimated in the second quarter as the military government accelerated spending on road and rail projects to help offset weak demand for the nation's exports.

Gross domestic product expanded 3.5 per cent in the three months through June from a year earlier, the National Economic and Social Development Board said in Bangkok Monday. That compares with the 3.3 per cent median estimate in a Bloomberg News survey of 22 analysts. GDP grew 0.8 per cent from the previous three months, compared with a 0.5 per cent median estimate.

The central bank earlier this month kept its key interest rate unchanged, opting to preserve its scope for future action and allow time for the government's fiscal spending to kickstart growth.

While investor confidence was bolstered by the peaceful completion of a national vote on the constitution on Aug 7, a series of bomb attacks in cities across Thailand's southern provinces late last week will test the resolve of a military government that has made security a top priority since seizing power in a 2014 coup.

"The ongoing public spending and robust growth in tourists continued to play key roles in driving the economy," Usara Wilaipich, a Bangkok-based economist at Standard Chartered Plc, said before the release.

"Consumption and private investment are expected to have recovered, albeit gradually, from the previous quarter given higher farm income and improving business sentiment. As a result, we believe that stronger domestic demand would be large enough to have offset the contraction of exports, and kept the economy growing at faster pace in the second quarter."

BLOOMBERG