(Adds detail, economist comments)
* Q2 GDP q/q -0.3 pct vs poll's +0.2 pct, revised -1.7 pct
* Q2 GDP y/y +2.8 pct vs poll's +3.3 pct, Q1 revised +5.4
* 2013 growth forecast trimmed to 3.8-4.3 from 4.2-5.2 pct
* Domestic demand moderates, exports soft
By Kitiphong Thaichareon and Orathai Sriring
BANGKOK, Aug 19 Thailand's economy contracted
unexpectedly in the second quarter, slipping into a mild
recession, amid weakness in exports, domestic consumption and
Southeast Asia's second-largest economy shrank 0.3 percent
in the second quarter from the preceding three-month period,
after contracting by a revised 1.7 percent in January-March,
data showed on Monday.
The median forecast in a Reuters poll was for growth of 0.2
percent growth. A recession is typically defined as two
consecutive quarters of contraction in gross domestic product
On an annual basis, economic growth in April-June slowed to
2.8 percent, versus 3.3 percent in the poll, and compared with a
revised 5.4 percent in January-March.
Also on Monday, the National Economic and Social Development
Board (NESDB) cut its forecast for full-year economic expansion
to 3.8-4.3 percent from 4.2-5.2 percent seen in May. A Reuters
poll projected 4.0 percent growth.
But economists see some improvement in export and domestic
demand in the second half of the year.
"The weaker than expected Q2 GDP growth further pressures
the Bank of Thailand to cut its policy rate. However, high
credit growth and rising household debt narrow the prospect for
a lowering of interest rates," said Bernard Aw with Forecast Pte
"The status quo on the policy is the best way forward,
particularly when the central bank sees a pick-up in economic
momentum in the second half."
After an interest rate cut in May, the Bank of Thailand's
monetary policy committee left the benchmark rate
unchanged at 2.50 percent at its July meeting, citing high
household debt as a concern.
The central bank has said current monetary settings are
still appropriate for growth. It next meets on Aug. 21, and
economists expect no change in the rate for some months.
Thailand, like other Asian exporters, has been hurt by
prolonged weakness in global demand that is weighing on
Domestic consumption - which makes up about half of the
economy - also has declined due to the fading impact of
government stimulus measures and recovery work after severe
flooding in late 2011. Delays in public infrastructure plans
have also dragged on investment.
SOME IMPROVEMENT SEEN
Export value in the second quarter totaled US$55.6 billion,
a 1.9 percent contraction compared with 4.5 percent growth in
the first quarter. The contraction was due to the slow recovery
of global economy and the appreciation of the Thai baht.
But economists expected some improvement in coming months.
"Looking forward, moderate growth is likely to extend into
the second half of 2013," said Usara Wilaipich, a senior
economist at Standard Chartered bank.
"Despite lower downside risks in the U.S., slowing demand
from China and Asian economies will continue to drag on
Thailand's exports. Meanwhile, domestic demand is expected to
grow moderately, given higher household debt and rekindled
political risk. We maintain our long-held GDP forecast for 2013
at 4.0 percent percent."
(Editing by Kim Coghill)